The data in the table below assumes that with the same quantity of resources, bo

Question

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day. Table 20.2 ProductsComputers Food Country Australia 1,000 2,000 Philippines 200 1,200 According to Table 20.2, Australia has an absolute advantage in the production of both food and computers. absolute disadvantage in the production of food absolute advantage in the production of only computers. absolute advantage in the production of only food. absolute disadvantage in the production of both food and computers.

Explanation / Answer

A country is said to have absolute advantage in production of a good when using same quantity of resources as other country, it is able to produce more unit of good relative to the other country.

In given case, using same quantity of resources, Australia can produce greater quantity of both computers and food than Philippines.

So,

Australia has an absolute advantage in production of both food and computers.

Hence, the correct answer is the option (1).

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