Settings alzania produces and consumes 500,000 tons of cotton during a year. Reports indicate that alzania's neighbor, which also employs the same number of people in the cotton industry, consumed 400,000 tons of cotton. This led industry experts to believe that alzania had an absolute advantage in the production of cotton over its neighbor.

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Sonia

Business

27 January, 14:23

Settings alzania produces and consumes 500,000 tons of cotton during a year. Reports indicate that alzania's neighbor, which also employs the same number of people in the cotton industry, consumed 400,000 tons of cotton. This led industry experts to believe that alzania had an absolute advantage in the production of cotton over its neighbor.

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Jade Kidd · Answer 1

Answer: C - Alzania's neighbor exported half its production of cotton that year

Explanation: Alzania produces and consumes 500,000 tons of cotton during a year. While, the neighbor which also employs the same number of people in the cotton industry, consumed 400,000 tons of cotton. There is no information on production of the neighbor. Just by looking at the consumption units we can argue that Alzania has an absolute advantage over the neighbor as it consumes more. However, if there is any information on the amount of exports of cotton from the neighbor then it will weaken the absolute advantage conclusion.

Thus, if Alzania's neighbor exported half its production of cotton that year the total production of cotton is greater of the neighbor than Alzania.