Which of the following is the best measurement to use to determine who has the absolute advantage in producing a good?

• A. The ability to produce more output with the same amount of resources
• B. The level of specialization in production
• C. The opportunity cost of producing one good over another
• D. The ratio of marginal utilities between two goods

Answer: (A)

Verified step by step guidance

1. Understand the concept of absolute advantage: It refers to the ability of a producer (individual, firm, or country) to produce more output of a good using the same amount of resources compared to another producer.
2. Review each option and relate it to the definition of absolute advantage:
3. - 'The ability to produce more output with the same amount of resources' directly matches the definition of absolute advantage.
4. - 'The level of specialization in production' relates more to comparative advantage and efficiency gains, not absolute advantage.
5. - 'The opportunity cost of producing one good over another' is the key concept behind comparative advantage, not absolute advantage.
6. - 'The ratio of marginal utilities between two goods' pertains to consumer preferences and utility maximization, unrelated to absolute advantage.