Day: June 3, 2022

In a world economy there are two goods, guns and butter, and two countries, X and Y. Country X can produce both guns and butter with fewer resources per unit than country Y, but country X has a higher opportunity cost in the production of guns than country Y.

Which statement is correct?

Select ONE answer:

1. X has an absolute advantage in butter but NOT in guns.
2. X has an absolute advantage in guns but NOT in butter.
3. X has a comparative advantage in butter.
4. X has a comparative advantage in guns.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

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