Figure 3-4
-Refer to Figure 3-4. Which of the following is correct?
A)Ben has an absolute advantage in wine, and Jerry has an absolute advantage in neither good.
B)Ben has an absolute advantage in beer, and Jerry has an absolute advantage in wine.
C)Ben has an absolute advantage in wine, and Jerry has an absolute advantage in beer.
D)Ben has an absolute advantage in neither good, and Jerry has an absolute advantage in both goods.

Question

Figure 3-4  
-Refer to Figure 3-4. Which of the following is correct?
A)Ben has an absolute advantage in wine, and Jerry has an absolute advantage in neither good. 
B)Ben has an absolute advantage in beer, and Jerry has an absolute advantage in wine. 
C)Ben has an absolute advantage in wine, and Jerry has an absolute advantage in beer. 
D)Ben has an absolute advantage in neither good, and Jerry has an absolute advantage in both goods.

Quizplus · Accepted Answer

In order to determine absolute advantage, we look at who can produce more of a good with the same amount of resources. According to the table, Ben can produce 4 bottles of wine or 6 bottles of beer in one hour, while Jerry can produce 3 bottles of wine or 4 bottles of beer in one hour. This means that Ben has an absolute advantage in wine (he can produce more wine than Jerry in the same amount of time) and Jerry has an absolute advantage in beer (he can produce more beer than Ben in the same amount of time). Choice C correctly identifies this relationship.