Q. In North, it takes 50 labor hours to produce cloth and 100 hours to produce grain. In South, it takes 200 labor hours to produce cloth and 200 hours to produce grain. Which of the following statements is true? (Solved)
1. South has an absolute advantage in the production of grain.
2. North has a comparative advantage in the production of cloth.
3. South has an absolute advantage in the production of both cloth and grain.
4. North should produce grain.
- b. North has a comparative advantage in the production of cloth.