When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had
A) a comparative advantage in production of the product.
B) an absolute advantage in production of the product.
C) a higher opportunity cost of producing the product.
D) no incentive to import the product, regardless of the cost-price conditions for other products.

Question

Quizplus · Accepted Answer

An absolute advantage occurs when a country can produce a good using fewer resources than another country.

When Iceland Can Generate a Product Using Fewer Labor Hours