Read the Case commencing on the next page and answer the questions below: A clear example of a nation with an absolute advantage is Saudi Arabia, a country with abundant oil supplies that provide it with an absolute advantage over other nations.Other examples include Colombia and its climate—ideally suited to growing coffee—and Zambia, possessing some of the world’s richest copper mines. For Saudi Arabia to try and grow coffee and Colombia to drill for oil would be an extremely costly and, likely, unproductive undertaking.Q1 Explain absolute advantage theory. How can absolute advantage benefit a nation?

Which situation best illustrates the concept of absolute advantage?A.A software company is forced to increase its prices to pay for rising labor costs.B.A restaurant buys its ingredients from nearby farms to help the local economy.C.A factory in Vietnam can produce more shoes than other countries.D.The total value of U.S. exports is lower than the value of the country's imports

The theory of comparative advantage demonstrates that even if a country is less efficient than another in producing all goods, it can still benefit from trade by specializing in the production of the good in which it has:  A. The highest absolute advantage  B. The lowest opportunity cost  C. The highest total production  D. The lowest absolute cost

advantage occurs when a country has a cost advantage in a good over another producing country.

Economic theory suggest which of the following is true regarding comparative advantage and absolute advantage?Question 9Select one:a.when a country has an absolute advantage in producing two goods, it will also have a comparative advantage in producing those goods.b.a country gains economically if it concentrates its efforts in those economic activities where it has the greatest advantage or the least disadvantage, and then trades with other countries for those goods it doesn’t.c.a country with an absolute advantage in producing all goods will be better off by producing all goods in equal quantity.d.comparative advantage has nothing to do with determining what a country should produce.e.comparative and absolute advantage mean the same thing in international trade.

In general, when there is free trade and nations produce and export goods and services for which they have comparative advantage, the global economy is better off.Absolute Advantage means that one nation (or individual) can produce more of a good or service than another. Another way of looking at it is to say that one nation (or individual) can produce a good or service using fewer inputs than another uses.Comparative Advantage, in contrast, looks at the opportunity cost a nation (or individual) experiences when producing a good. When one item is produced, something else is given up – but how much? For example, if a nation produces only pickup trucks and pineapples, comparative advantage depends on how many pickup trucks are given up to produce a unit of pineapples, and vice versa. Comparative advantage helps us determine whether it is beneficial for two nations or individuals to specialize and trade.