Suppose an American Worker Can Make 50 Pairs of Gloves

question 34

Multiple Choice

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true?

• A) Bangladesh should specialize in glove production because it has a comparative advantage at producing gloves.
• B) Bangladesh should specialize in radish production because it has a comparative advantage at producing radishes.
• C) Bangladesh should produce both gloves and radishes because it has an absolute advantage at producing both goods.
• D) Bangladesh should produce only radishes because it has an absolute advantage at producing radishes.

---

Definitions:

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the true value of goods and services.

Final Output

The total value of all goods and services produced and sold by a country in a specific time period without any duplication.

Intermediate Goods

Goods that are used as inputs in the production of other goods and services, rather than being sold directly to end consumers.

GDP

The Gross Domestic Product measures the overall market or financial worth of every completed good and service produced within a country's borders in a set period.