Consider two countries I and II producing two commodities A and B. There is only one factor of production, that is, Labour hours. The table below gives labour hours required by each
country to produce a unit of commodities A and B.

Labour hours needed to produce a unit of

Answer the following:

 (i) Which country has an absolute advantage in producing commodity A? Give reason. 

 (ii) Which country has a comparative advantage in producing commodity B? Give reason.

 (iii) If trade takes place between both the given countries, which country will export commodity A?

(i) Absolute Advantage in Producing Commodity A:

Absolute advantage refers to a country's ability to produce a good using fewer resources (in this case, labor hours) than another country. To determine which country has an absolute advantage in producing commodity A, we compare the labor hours required for each country.

In this case, Country I requires 4 hours to produce one unit of commodity A, while Country II requires 6 hours. Therefore, Country I has an absolute advantage in producing commodity A because it can produce it with fewer labor hours compared to Country __________ _____ _______ ___ ______ __________ ___ ________ ______.
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