Sofia, who lives in chicago, knits and sells alpaca-wool scarves. she spends 15 hours knitting one scarf. maria, who also knits, lives in lima, peru. she spends 12 hours knitting one scarf. which of these statements is true?
A producer is said to have an absolute advantage over another producer when he required less amount of input to produce the same good compared to the other producer.
While a producer is said to have a comparative advantage over another producer when he produces his goods at a lesser opportunity cost compared to the other produer.
Here, time is one of the inputs used in production and Maria produces a scarf at a lesser time compared to Sofia. Thus, Maria has an absolute advantage over Maria in the production of scarves.
Therefore, the true statement is "Maria has an absolute advantage over Sofia".
