Multiple Choice
Suppose Country A can produce 100 coffees per day and Country B can produce 80 coffees per day. Who has the absolute advantage in selling coffees?
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2. Introductory Economic Models
PPF - Comparative Advantage and Absolute Advantage
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Which quality best describes a producer with an absolute advantage?
A
Ability to produce a good at a lower opportunity cost than others
B
Ability to produce more of a good using fewer resources than others
C
Ability to consume more goods than others
D
Ability to specialize in the production of multiple goods
Verified step by step guidance1
Understand the concept of absolute advantage: It refers to the ability of a producer to produce more output of a good using the same or fewer resources compared to others.
Differentiate absolute advantage from comparative advantage: Comparative advantage is about producing at a lower opportunity cost, while absolute advantage focuses on sheer productivity or efficiency.
Analyze each option in the problem: Identify which one aligns with the definition of absolute advantage.
Recognize that 'Ability to produce more of a good using fewer resources than others' directly matches the definition of absolute advantage.
Conclude that the correct quality describing a producer with an absolute advantage is their higher productivity or efficiency in producing a good compared to others.
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