Country M enjoys absolute advantage over country N in the production of commodities X and Y, if country M

Step 1: Analyze the question The question asks what it means for Country M to have an absolute advantage over Country N in producing both commodities X and Y.

Step 2: The concept Absolute advantage (from Adam Smith) is the ability of a country to produce a good using fewer resources (lower cost, or higher output per unit of input) than another country. In other words, the country is more efficient at producing that good.

• Absolute advantage = produces more output with the same resources, or the same output with fewer resources.
• Comparative advantage (David Ricardo) = produces a good at a lower opportunity cost. This is a different idea.

Step 3: Evaluate the options

• A. Inefficient in both goods. This is the opposite of absolute advantage. ❌
• B. More efficient than country N in producing both X and Y. This matches the definition exactly. ✅
• C. Can produce only Y cheaper. This gives an advantage in only one good, not both. ❌
• D. Both countries are efficient. This does not show M is better than N, so it is not an advantage. ❌

Step 4: Answer The correct option is B.

Exam tip: Remember "Absolute = Always better." If a country is better at producing a good with fewer resources, it has an absolute advantage. If the question talks about opportunity cost, think comparative advantage instead.