To determine the correct answer regarding the international trade conditions between Country I and Country II based on the provided data, we need to analyze the production capabilities of both countries in terms of cocoa and cloth. Given Data:

• Country I:
• Labour Days: 200
• Cocoa Production: 600 tons
• Cloth Production: 900 tons
• Country II:
• Labour Days: 200
• Cocoa Production: 300 tons
• Cloth Production: 800 tons

Step-by-Step Explanation:

1. Understanding Absolute Advantage:
2. A country has an absolute advantage in the production of a good if it can produce more of that good with the same amount of resources compared to another country.
3. We will compare the production of cocoa and cloth in both countries.
4. Comparing Cocoa Production:
5. Country I produces 600 tons of cocoa with 200 labour days.
6. Country II produces 300 tons of cocoa with the same 200 labour days.
7. Since 600 tons (Country I) > 300 tons (Country II), Country I has an absolute advantage in cocoa production.
8. Comparing Cloth Production:
9. Country I produces 900 tons of cloth with 200 labour days.
10. Country II produces 800 tons of cloth with the same 200 labour days.
11. Since 900 tons (Country I) > 800 tons (Country II), Country I also has an absolute advantage in cloth production.
12. Conclusion on Absolute Advantage:
13. Since Country I has an absolute advantage in both cocoa and cloth production, Option B is correct: "Country I has absolute advantage in the production of both cocoa and cloth."

Evaluating Other Options:

• Option A: "Country I has absolute disadvantage in the production of both cocoa and cloth."
• This is incorrect because we have established that Country I has an absolute advantage in both goods.
• Option C: "Country II has absolute advantage in the production of both cocoa and cloth."
• This is incorrect as Country II does not produce more of either good compared to Country I.
• Option D: "Country II has comparative advantage in the production of cocoa."
• To determine comparative advantage, we would need to calculate the opportunity costs of producing cocoa and cloth in both countries. However, since Country I has an absolute advantage in both goods, it is unlikely that Country II has a comparative advantage in cocoa.

Opportunity Cost Calculation (for further understanding):

• Country I:
• Opportunity cost of producing 1 ton of cocoa = Cloth produced / Cocoa produced = 900/600 = 1.5 tons of cloth.
• Opportunity cost of producing 1 ton of cloth = Cocoa produced / Cloth produced = 600/900 = 0.67 tons of cocoa.
• Country II:
• Opportunity cost of producing 1 ton of cocoa = Cloth produced / Cocoa produced = 800/300 = 2.67 tons of cloth.
• Opportunity cost of producing 1 ton of cloth = Cocoa produced / Cloth produced = 300/800 = 0.375 tons of cocoa.

From the opportunity cost calculations, we can see that Country I has a lower opportunity cost for cloth, while Country II has a higher opportunity cost for cocoa, confirming that Country I has a comparative advantage in cloth and Country II in cocoa, but this does not change the fact that Country I has an absolute advantage in both. Revision Summary:

• Absolute Advantage: Country I has an absolute advantage in both cocoa and cloth production.
• Comparative Advantage: Requires opportunity cost analysis; Country I has a comparative advantage in cloth.
• Correct Answer: Option B is correct; Country I has absolute advantage in both goods.
• Incorrect Options: A, C, and D are incorrect based on the production data and analysis.