Question

In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?

Short answer

It holds true because France can produce one sweater with less worker than Tunisia and one bottle of wine with less worker than Tunisia.

Step-by-step solution

Step 1. Introduction

Absolute advantage refers to the situation when a person, region, or organization is able to produce a good at a lower cost or produce higher quantity of good at the same cost.

Step 2. Reason why France has absolute advantage in production of wine.

Basically, when one worker is required to produce one sweater in France at the same time two workers is required to produce one sweater in Tunisia. It resulted that the France has 'absolute advantage' in the production of sweater as compare to Tunisia. Whereas, when one worker is required to produce one bottle of wine in France at the same time three workers is required to produce one bottle of wine in Tunisia. It resulted that the France has 'absolute advantage' in the production of wine.