In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true? a. India has a comparative advantage in the production of rice.
b. China has a comparative advantage in the production of rice.
c. China has both an absolute and comparative advantage in the production of rice.
d. India has an absolute advantage in the production of rice.

a. India has a comparative advantage in the production of rice.

Explanation:

A comparative advantage is when a country is able to produce a product with a lower opportunity cost.

An absolute advantage is when a country is able to produce more products with the same resources than another country.

For India to produce 1 pound of rice, it has an opportunity cost of 0.33 shirts.

For China to produce 1 pound of rice, it has an opportunity cost of 0.5 shirts.

This indicates that India has a comparative advantage in producing rice as it has a lower opportunity cost.

According to this, the answer is that the statement that is true is: India has a comparative advantage in the production of rice.

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