An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day
The Australian factory can produce either 100 engines or 75 transmission per day. A) The Vietnamese factory has an absolute advantage producing both engines and transmissions.
B) The Australian factory has an absolute advantage in the production of transmissions.
C) The Vietnamese factory has a comparative advantage in the production of transmissions.
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.
A
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