Question
If a firm has a comparative advantage in producing shirts, then they must also have an absolute advantage in producing shirts.
True
False
True
False
Answers
GPT-4o mini
False.
A firm can have a comparative advantage in producing shirts even if it does not have an absolute advantage. Comparative advantage refers to the ability to produce a good at a lower opportunity cost compared to another producer, while absolute advantage refers to the ability to produce more of a good with the same resources compared to another producer. It's possible for a firm to have a comparative advantage in making a product despite another firm being able to produce that product more efficiently in absolute terms.
A firm can have a comparative advantage in producing shirts even if it does not have an absolute advantage. Comparative advantage refers to the ability to produce a good at a lower opportunity cost compared to another producer, while absolute advantage refers to the ability to produce more of a good with the same resources compared to another producer. It's possible for a firm to have a comparative advantage in making a product despite another firm being able to produce that product more efficiently in absolute terms.