1. There are two firms, firms A and B. Suppose that the two firms both produce Jam and butter and sell them for the same price. Shown below are the combinations of the two goods each firm can produce using the same amounts of labor and capital. Using the information below, which answer provides the most accurate depiction of comparative advantage and absolute advantage? Firm A Exhibit 1 Firm B Jam Butter Jam Butter 0 120 0 100 20 90 20 80 40 60 40 60 60 30 60 40 80 0 80 20 100 0 Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm A has a comparative advantage in jam, and an absolute advantage in jam.
1. There are two firms, firms A and B. Suppose that the two firms both produce Jam and butter and sell them for the same price. Shown below are the combinations of the two goods each firm can produce using the same amounts of labor and capital. Using the information below, which answer provides the most accurate depiction of comparative advantage and absolute advantage? Firm A Exhibit 1 Firm B Jam Butter Jam Butter 0 120 0 100 20 90 20 80 40 60 40 60 60 30 60 40 80 0 80 20 100 0 Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm B has a comparative advantage in butter, and absolute advantage in jam. Firm A has a comparative advantage in jam, and an absolute advantage in jam.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter22: Frontiers Of Microeconomics
Section: Chapter Questions
Problem 6PA
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