In a 2-country, 2-good model, we assume the 2 states—Futland and Tandam share a common currency, they both have the same wages, and they both produce two goods: bicycles and boots. The units of labour requirement are shown below, assuming constant returns to scale. Based on the table above, Futland has an absolute advantage in both goods and a comparative advantage in Boots (and Tandam has a comparative advantage in Bicycles). Indicate whether the above statement is True or False, AND with a couple of sentences explain why. n

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The statement is False Futland does not have a comparative advantage in boots rather it has a comp... View the full answer