TRUE/FALSE Consider the Ricardian model. Suppose that country A and country B produce only two goods, Apples and Bananas. Table TF-T1 gives the marginal product of labour for producing the two goods in country A and country B. Table TF-T1 Country A Country B Apple 3 2 Banana 50 80 Evaluate the following statement: True or False and explain in max. 200 words (note: 1 point penalty for exceeding the word limit): "Country A has an absolute advantage in producing bananas; Country B has an absolute advantage in producing apples."
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According to the table, the marginal product of labor for producing bananas is 50 in country A and 80 in country B. Since the marginal product of labor is higher in country B, we can conclude that country B has an absolute advantage in producing Show more…
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