Question

Suppose the country of Alphaland can produce more cars than Omegaland can produce, given the same resources. An economist would conclude that Alphaland has a(n) _____ in producing cars. A. absolute advantage b. comparative advantage c. higher opportunity cost d. higher resource cost

Answer 1

Suppose the country of Alphaland can produce more cars than Omegaland can produce, given the same resources. An economist would conclude that Alphaland has absolute advantage in producing cars.

An absolute advantage exists when a manufacturer can offer more goods or services for the same cost, or the same quantity at a lower cost than its competitors.

Consider the following example. Country A can use its resources to make him 100 pounds of coffee or he can make 50 pounds of tea (but not both). With the same resources, country B can make him 90 pounds of coffee or he can make 48 pounds of tea. Country A has an absolute advantage over both products. An absolute advantage is the economic principle that allows one company to produce and sell the same goods more efficiently than another company. Refers to the production level of an organization. Better access to corporate resources makes design and manufacturing processes more efficient.

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