Consider a Two-Country, Two-Commodity Model A)Country B Has an Absolute Advantage in the Production of the Units

question 24

Multiple Choice

Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. Which of the following statements is true? $$\begin{array} { | c | c | c | } \hline \text { Productivity } & \text { Country A } & \text { Country B } \\\hline \text { Good X } & 1.00 & 0.50 \\\hline \text { Good Y } & 0.20 & 0.70 \\\hline\end{array}$$

• A)Country B has an absolute advantage in the production of both good X and good Y.
• B)Country A has an absolute advantage in the production of good X.
• C)Country A has an absolute advantage in the production of both good X and good Y.
• D)Country B has an absolute advantage in the production of good X.

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