Use the information given in the table below to answer the question Computers Shoes United States 3 6 pairs South Africa 1 3 pairs Which country or countries have an absolute advantage and comparative advantage in shoes? (4 marks) A South Africa has an absolute and comparative advantage in shoes B The United States has an absolute and comparative advantage in shoes

The absolute advantage in production occurs when a country can produce more of a good with all its resources than other countries. The comparative advantage occurs when a country has a lower opportunity cost of producing a good than other countries. Opportunity cost is the cost of forgoing the next best alternative. If a country can produce either A unit of good X and B unit of good Y with all of its resources and the country decided to produce on;y X, then the opportunity cost of A unit of X is B unit of Y.

In this case, the USA can produce more of both computers and shoes than SA, hence the USA has an absolute advantage in both goods. On the other hand in the USA, the opportunity cost of producing 3 units of a computer is 6 pairs of shoes. then the opportunity cost of producing 1 computer is 6/3=2 pair of shoes. Similarly, the opportunity cost of producing 1 pair of shoes in the USA is 1/2 computer. In SA the opportunity cost of producing 1 computer is 3 pairs of shoes and that of 1 pair of shoes is 1/3 computers. Therefore, the USA has a comparative advantage in producing computers and SA has a comparative advantage in producing shoes.

Given the options:

• SA does not have an absolute advantage in any of the goods.
• The USA does not have a comparative advantage in shoes.
• SA does not have an absolute advantage in any of the goods.
• SA has a comparative advantage in shoes and the USA has an absolute advantage in shoes.

Therefore, the correct option is: D