Asked by Lesley Figueroa on May 05, 2024

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If one person has an absolute advantage in producing both of two goods,then that person:

A) must also have a comparative advantage in both goods.
B) cannot benefit from trade.
C) cannot have a comparative advantage in either good.
D) will have a comparative advantage in only one good.
E) should specialize in the production of both goods.

Absolute Advantage

The ability of a party (country, company, individual) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, leading to more efficient trade possibilities.

Specialize

Refers to the process of focusing on a specific area of knowledge or skill within a broader field.

  • Master the concepts of absolute and comparative advantage as applied to economic transactions.
  • Contrast the theories of absolute advantage and comparative advantage.
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PO
Paraic O CarrollMay 12, 2024
Final Answer :
D
Explanation :
Having an absolute advantage in producing both goods does not mean having a comparative advantage in both. Comparative advantage is about producing a good at a lower opportunity cost than others. It's possible for someone to have an absolute advantage in both goods but only a comparative advantage in one, because comparative advantage is relative to the trade-offs between producing different goods.