Answer to Question #133149 in Macroeconomics for Valerie

Question

Country A can produce 20 units of maize or 10 units of bananas. Country B can produce 30 units of maize or 20 units of bananas.
Assuming constant opportunity costs, which of the following statements are correct?
a. Country B has an absolute advantage in the production of maize.
b. Country B has an absolute advantage in the production of bananas.
c. Country A has a relative advantage in the production of bananas.
[1] All the statements are correct.
[2] a and b
[3] a and c
[4] b and c
[5] c

Answer 1

a. Country B has an absolute advantage in the production of maize.(CORRECT)

b. Country B has an absolute advantage in the production of bananas.(CORRECT)

The above statements are correct compared to country B since its production is low.So the correct answer is 2.