Sweatshirts are produced using cotton and labour. In Montega, a sweatshirt can be produced with 3 kilos of cotton and 3 hours of labour time. In Xena, a sweatshirt can be produced with 3 kilos of cotton and 2 hours of labour time. Which of the following is TRUE?
◦ Montega has both a comparative and an absolute advantage in the production of sweatshirts.
◦ Montega has an absolute advantage in the production of sweatshirts, but from this information it cannot be determined if Montega has a comparative advantage in the production of sweatshirts.
◦ Xena has an absolute advantage in the production of sweatshirts, but from this information it cannot be determined if Xena has a comparative advantage in the production of sweatshirts.
◦ Xena has both a comparative and an absolute advantage in the production of sweatshirts.
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