U.S. U.K Wheat 12 10 Cloth 8 6 The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour). i.The United States has an absolute advantage in the production of both goods. ii.The United Kingdom has a comparative advantage in the production of wheat. iii.The opportunity cost of cloth is lower in the United States. iv.The opportunity cost of cloth is lower in the United Kingdom. Which one of the following is true? a) only i, ii and iv are correct b) Only i, ii, and iii are correct c) Only i and ii are correct d) Only iii is correct

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.