The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good, a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. b. has a comparative advantage in the production of that good. c. has an absolute advantage in the production of that good. d. should be the only producer of that good.

Question

Douglas Jenkins

Business

8 March, 07:18

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good, a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers. b. has a comparative advantage in the production of that good. c. has an absolute advantage in the production of that good. d. should be the only producer of that good.

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Answers (1)

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Alex Haas · Answer 1

Option (C) is correct.

Explanation:

A country or a producer has an absolute advantage in producing a commodity if it uses the lower quantity of inputs than the other country or a producer for producing the same amount of goods.

For example;

Suppose there are two countries; Japan and china.

Each are producing 5 packets of bread.

Japan produces these packets of bread with 4 labor hours and china produces these packets of bread with 2 labor hours.

So in this case, China has an absolute advantage because it produces the same quantity of goods with the fewer inputs.