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9 June, 17:07

Sofia, who lives in chicago, knits and sells alpaca-wool scarves. she spends 15 hours knitting one scarf. maria, who also knits, lives in lima, peru. she spends 12 hours knitting one scarf. which of these statements is true?

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  1. 9 June, 19:03
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    A producer is said to have an absolute advantage over another producer when he required less amount of input to produce the same good compared to the other producer.

    While a producer is said to have a comparative advantage over another producer when he produces his goods at a lesser opportunity cost compared to the other produer.

    Here, time is one of the inputs used in production and Maria produces a scarf at a lesser time compared to Sofia. Thus, Maria has an absolute advantage over Maria in the production of scarves.

    Therefore, the true statement is " Maria has an absolute advantage over Sofia".
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