Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can

Question

4 months ago

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Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can

produce 36 units of food per year or 18 units of clothing. Which of the following is true?
Georgeland has an absolute but not a comparative advantage in producing clothing.
Georgeland has both an absolute and a comparative advantage in producing clothing.
Alland has an absolute but not a comparative advantage in producing food.
Alland has both an absolute and a comparative advantage in producing food.

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1 answer:

Mariulka [3.8K] · Answer 1 · 2026-02-24T11:22:34+03:00

Answer:

Georgeland only has an absolute advantage in clothing production, not a comparative one.

Explanation:

Absolute advantage refers to a company's capacity to generate more of a product using the same resources compared to its rivals, typically due to a more effective production method.

In contrast, comparative advantage involves producing goods with a lower opportunity cost, allowing for competitive pricing.

Georgeland can manufacture 18 clothing units annually, while Alland's annual output is 16 units; therefore, Georgeland displays absolute advantage.

However, Georgeland incurs an opportunity cost of 36 food units for producing clothing, which exceeds Alland's 32 food units; hence, Georgeland lacks a comparative advantage in clothing production.