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Absolute Advantage: Mexico and Canada Make Phones and Chairs

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Suppose Canada and Mexico are trade partners. Canada can make either 50 chairs or 10 phones in a day. Mexico can produce either 20 chairs or 10 phones in a day.

Which of the following statements about absolute advantage is true?

A

Canada has the absolute advantage in phones but not in chairs.

B

Mexico has the absolute advantage in chairs.

C

Mexico has the absolute advantage in phones and chairs.

D

Neither country has the absolute advantage in phones.

E

Canada does not have the absolute advantage in either phones or chairs.