Two nations have the following production capacity given their endowment of resources. Country A can produce 50 units of beer or 80 units of pizzas. Country B can produce 100 units of beer or 90 units of pizzas. Which of the following statement is most appropriate?
A. Country A has a comparative advantage in beer and country B has an absolute advantage in pizzas.
B. Country A has a comparative advantage in pizza and country B has a comparative advantage in beer.
C. Country A has an absolute advantage both products.
D. Both b and c are correct.
Answer: B. Country A has a comparative advantage in pizza and country B has a comparative advantage in beer.
Economics
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