based on the following information. A worker in the U.S. can produce either 5 machines per day or 15 yards of cloth. A worker in India can produce either 1 machine per day or 5 yards of cloth.
-Which of the following statements is false?
A) India has a comparative advantage in the production of cloth.
B) The U.S. has a comparative advantage in the production of machines.
C) The U.S. has an absolute advantage in the production of machines.
D) India has a comparative advantage in the production of machines.
E) India does not have a comparative advantage in either product.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by which country has the lower opportunity cost in the production of a good. For cloth, India's opportunity cost is 1/5 of a machine per yard of cloth (1 machine for 5 yards), while the U.S.'s opportunity cost is 1/3 of a machine per yard of cloth (5 machines for 15 yards). Thus, India has a comparative advantage in cloth, not machines. The U.S. has an absolute advantage in both products because it can produce more of both with the same resources.

Based on the Following Information