Question
If Country A uses all of the resources at its disposal, it can produce a maximum of 500 watches or 200 televisions. Within the same time frame, if Country B uses all of its resources, it can produce a maximum of 200 watches or 100 televisions. Which of the following must be true?(1 point)
Responses
Country B has the absolute advantage and the comparative advantage in watch production.
Country B has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage in watch production, but Country B has the comparative advantage in watch production.
Country A has the absolute advantage in watch production, but Country B has the comparative advantage in watch production.
Country B has the absolute advantage in watch production, but Country A has the comparative advantage in watch production.
Responses
Country B has the absolute advantage and the comparative advantage in watch production.
Country B has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage and the comparative advantage in watch production.
Country A has the absolute advantage in watch production, but Country B has the comparative advantage in watch production.
Country A has the absolute advantage in watch production, but Country B has the comparative advantage in watch production.
Country B has the absolute advantage in watch production, but Country A has the comparative advantage in watch production.
Answers
GPT-4o mini
To determine which country has the absolute and comparative advantages in watch and television production, we need to analyze the maximum outputs:
**Country A:**
- Maximum: 500 watches or 200 televisions
- Opportunity cost of 1 watch = 200 televisions / 500 watches = 0.4 televisions
- Opportunity cost of 1 television = 500 watches / 200 televisions = 2.5 watches
**Country B:**
- Maximum: 200 watches or 100 televisions
- Opportunity cost of 1 watch = 100 televisions / 200 watches = 0.5 televisions
- Opportunity cost of 1 television = 200 watches / 100 televisions = 2 watches
**Absolute Advantage:**
- Absolute advantage refers to the ability to produce more of a good with the same resources than another country.
- Country A can produce more watches (500 vs. 200) than Country B, so it has the absolute advantage in watch production.
- Country A can also produce more televisions (200 vs. 100) than Country B, so it has the absolute advantage in television production as well.
**Comparative Advantage:**
- Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another country.
- For watches:
- Country A's opportunity cost is 0.4 televisions per watch.
- Country B's opportunity cost is 0.5 televisions per watch.
- Since Country A has a lower opportunity cost for watches, it has the comparative advantage in watch production.
- For televisions:
- Country A's opportunity cost is 2.5 watches per television.
- Country B's opportunity cost is 2 watches per television.
- Since Country B has a lower opportunity cost for televisions, it has the comparative advantage in television production.
Based on this analysis:
- **Country A has the absolute advantage in watch production and also has the comparative advantage in watch production.**
- Thus, the correct response is:
**Country A has the absolute advantage and the comparative advantage in watch production.**
**Country A:**
- Maximum: 500 watches or 200 televisions
- Opportunity cost of 1 watch = 200 televisions / 500 watches = 0.4 televisions
- Opportunity cost of 1 television = 500 watches / 200 televisions = 2.5 watches
**Country B:**
- Maximum: 200 watches or 100 televisions
- Opportunity cost of 1 watch = 100 televisions / 200 watches = 0.5 televisions
- Opportunity cost of 1 television = 200 watches / 100 televisions = 2 watches
**Absolute Advantage:**
- Absolute advantage refers to the ability to produce more of a good with the same resources than another country.
- Country A can produce more watches (500 vs. 200) than Country B, so it has the absolute advantage in watch production.
- Country A can also produce more televisions (200 vs. 100) than Country B, so it has the absolute advantage in television production as well.
**Comparative Advantage:**
- Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another country.
- For watches:
- Country A's opportunity cost is 0.4 televisions per watch.
- Country B's opportunity cost is 0.5 televisions per watch.
- Since Country A has a lower opportunity cost for watches, it has the comparative advantage in watch production.
- For televisions:
- Country A's opportunity cost is 2.5 watches per television.
- Country B's opportunity cost is 2 watches per television.
- Since Country B has a lower opportunity cost for televisions, it has the comparative advantage in television production.
Based on this analysis:
- **Country A has the absolute advantage in watch production and also has the comparative advantage in watch production.**
- Thus, the correct response is:
**Country A has the absolute advantage and the comparative advantage in watch production.**