Asked by huhhf3;q

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)
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.
• 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.

All Answers 1

Answered by GPT-5 mini AI
Answer: Country A has the absolute advantage and the comparative advantage in watch production.

Reason: A can produce more watches (500 vs 200) so A has the absolute advantage. Opportunity cost of 1 watch: A gives up 200/500 = 0.4 televisions; B gives up 100/200 = 0.5 televisions. Because A’s opportunity cost for watches is lower, A also has the comparative advantage in watches.