Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
Let's break down why this is correct
Answer
Having an absolute advantage means that Country A can produce more of both cars and cocoa than Country B using the same resources. However, this doesn't mean Country A should produce both goods by itself. Instead, Country A should focus on producing the good it makes most efficiently compared to the other good, while Country B should specialize in what it produces best. For example, if Country A is much better at making cars than cocoa, and Country B is better at cocoa production, they can trade to benefit both. By specializing and trading, both countries can end up with more goods than if they tried to produce everything themselves.
Detailed Explanation
Even if Country A is better at making both items, it can still benefit from trade. Other options are incorrect because This answer suggests that being better at everything means no trade is needed.
Key Concepts
Absolute Advantage
Comparative Advantage
Opportunity Cost
Topic
Comparative and Absolute Advantage
Difficulty
medium level question
Cognitive Level
understand
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