Question

The United States and France both produce sweaters and caps. Suppose that a US worker can produce 50 caps per hour or 1 sweater per hour and a French worker can produce 40 caps per hour and 2 sweaters per hour. Based on this scenario, which statement is true?
The United States has a comparative advantage producing caps.
France has a comparative advantage producing caps.
The United States has a comparative advantage producing sweaters.
Neither country has a comparative advantage producing either good.

Answer 1

The first statement is true, because the US worker can produce 10 more caps in the same amount of time as the French worker, the US has a comparative advantage when making caps.

Answer 2

The true statement is A)The United States has a comparative advantage in producing caps.

What is comparative advantage?

Comparative benefit refers to the capability to supply goods and offerings at a lower possibility price, no longer always at an extra quantity or nice. Comparative gain is a key perception that trade will still occur despite the fact that one USA. has an absolute advantage in all products.

The comparative benefit is what you do excellent whilst additionally giving up the least. For an instance, if you're a splendid plumber and a first-rate babysitter, your comparative advantage is plumbing.

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