PLEASE ANSWER THE QUESTION WITH EVIDENCE AND EXPLANATION PLEASE USE THE COUNTRIE

Question

PLEASE ANSWER THE QUESTION WITH EVIDENCE AND EXPLANATION

PLEASE USE THE COUNTRIES (CHINA and FRANCE) AND THE GOODS (BIKES AND CARS)

China and France produce Bikes and Cars. Both goods are manufactured using only one production factor (LABOR). The following table shows the unit labor requirements for each product in each country.

BIKE

CAR

CHINA

2 Hrs.

16 Hrs.

FRANCE

8 Hrs.

8 Hrs.

NOTE: CHINA HAS 10,000 WORKERS AND FRANCE HAS 5,000 WORKERS.

QUESTIONS:

6. When would the world (China & France) just produce Cars?

BIKE

CAR

CHINA

2 Hrs.

16 Hrs.

FRANCE

8 Hrs.

8 Hrs.

Explanation / Answer

If opportunity costs of France are equal to that of China. In that case both have comparative advantage in cars i. e car takes less than 2 hours in China and less than 8 hours in France. I had made one mistake while answering your earlier question. [Actually China will produce cars(because it has comparative advantage in bikes I. E takes only 2hrs to produce instead of 16 hrs in case of cars) , not France and France will produce cars because it has comparative advantage in cars]

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