France has absolute advantage in the production oftiles: D: neither grapes nor textiles.(A: grapes; B: textiles: C: both grapes and tex GoodsGrapesTextilesSpain84Note: figures are hours of labor per unit of outputFrance155

Absolute advantage occurs where a country can produce good more efficiently relative to the another country. The absolute advantage can be used to specialize in the international trade. A country can specialize in trade even if it does not have absolute advantage. The comparative advantage is responsible for international trade or specialization in such situation. Answer: (D). France does not have absolute advantage in production of either of these good. The Spain can produce both both goods more efficiently. The more labor is required to produce both goods relative to the Spain. Thus, Spain has absolute advantage in production of both goods. Option (A) is incorrect because Spain needs less labor to produce one unit of the grape relative to the France. Option (B) is incorrect because textile also requires less labor in Spain relative to France. Thus, Spain has absolute advantage in production of the textile. Option (C) is incorrect because Spain has absolute advantage in production of both goods as it can produce per unit of both goods with lesser amount of labor.

Answered: France has absolute advantage in the…

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France has absolute advantage in the production of (A: grapes; B: textiles: C: both grapes and tex

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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