Suppose that because of climate or some other reason, country A\'s wheat farmers

Question

Suppose that because of climate or some other reason, country A's wheat farmers have higher productivity than country B's wheat farmers. That is, on the same size farm, country A can grow twice as much wheat as country B with the same amount of labor. a) Is this an example of O comparative advantage because Country B can produce more with the same resources as Country A O absolute advantage because Country A can produce more with the same resources as Country B Oabsolute advantage because Country B can produce more with the same resources as Country A comparative advantage because Country A can produce more with the same resources as Country B b) This means Country A may or may not export wheat depending on the ability to produce other goods will not export wheat since they produce other goods. ') will export wheat because this is what they are good at. will import wheat because they need it.

Explanation / Answer

a). This is an expample of absolute advantage. This is because the question clearly states that A's efficiency is higher, and that's the reason for him producing more.

b). may or may not export wheat depending on the ability to produce. This is because export happens only when a country has a comparative advantage over other country, but in this case we cannot determine if A has a comparative advantage or not.

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