Which of the following is true if Nation X produces coffee at a higher opportunity cost than Nation Y? Nation X must have an absolute advantage in producing coffee.
What is an absolute advantage in production?
- A producer has an absolute advantage over its rivals when it can create a good or service in a higher volume for the same price, or in the same volume at a cheaper price.
- For instance, countries in the Middle East have a distinct edge over those in North America because they can produce oil more swiftly and economically.
- The United States lacks a distinct edge in the production of coffee since it would be expensive and challenging to participate in coffee cultivation given that the coffee tree is not well-suited to the country's unfavorable climate.
Which of the following is true if Nation X produces coffee at a higher opportunity cost than Nation Y? Nation X must have an absolute advantage in producing coffee.
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