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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain.

To determine

To state: The possibility of having a comparative advantage in the production without having any absolute advantage.

Explanation

There is a possibility to have a comparative advantage in the production without having any absolute advantage. It can be understood and explained with the help of an illustration which explained below:

    CountryCoalOil
    Country X  80,000 tons  20,000 barrels
    Country Y  50,000 tons  18,000 barrels

As per above table, it can be seen that Country X has absolute advantage in both coal and oil production but Country Y has no absolute advantage in both coal and oil.

Now, after the absolute, let’s analyze the comparative advantage by evaluating the opportunity cost of both the products in Country X and Country Y

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