For the next nine questions, refer to the table above. Nebraska and Virginia each have 100 acres of farmland. The table gives the hypothetical figures for yield per acre in the two states. Who has the absolute advantage in the production of wheat? A) Nebraska B) Virginia C) Both of the above D) None of the above 20. Who has the absolute advantage in the production of cotton? A) Nebraska B) Virginia C) Both of the above D) None of the above 21. Who has the comparative advantage in the production of wheat? A) Nebraska B) Virginia C) Both of the above D) None of the above 22. Who has the comparative advantage in the production of cotton? A) Nebraska B) Virginia C) Both of the above D) None of the above Solution 19. Absolute advantage is determined by which country has the higher yield per acre. Answer: A. Nebraska 20. Answer: B. Cotton 21. Comparative advantage is determined by which country that can produce wheat at the lower opportunity cost of not producing cotton. Opportunity cost of producing 1 wheat : Nebraska = (12/10) cotton Virginia = (6/4) cotton. As 12/10 < 6/4 Answer: A. Nebraska 22. Similarly, As 10/12 > 4/6 Answer: B. Virginia.

1. For the next nine questions, refer to the table above. Nebraska and Virginia each have 100 acres
of farmland. The table gives the hypothetical figures for yield per acre in the two states. Who has
the absolute advantage in the production of wheat?
A) Nebraska
B) Virginia
C) Both of the above
D) None of the above
20.
Who has the absolute advantage in the production of cotton?
A) Nebraska
B) Virginia
C) Both of the above
D) None of the above
21.
Who has the comparative advantage in the production of wheat?
A) Nebraska
B) Virginia
C) Both of the above
D) None of the above
22.
Who has the comparative advantage in the production of cotton?
A) Nebraska
B) Virginia
C) Both of the above
D) None of the above
Solution
19. Absolute advantage is determined by which country has the higher yield per acre.
Answer: A. Nebraska
20. Answer: B. Cotton
21. Comparative advantage is determined by which country that can produce wheat at the lower
opportunity cost of not producing cotton.
Opportunity cost of producing 1 wheat :

2. Nebraska = (12/10) cotton
Virginia = (6/4) cotton.
As 12/10 < 6/4
Answer: A. Nebraska
22. Similarly,
As 10/12 > 4/6
Answer: B. Virginia