Assume that Zimbabwe and Portugal can switch between producing toothbrushes and
ID: 1133516 • Letter: A
Question
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.
Refer to Table 3-22. Zimbabwe has an absolute advantage in the production of
toothbrushes and a comparative advantage in the production of toothbrushes.
toothbrushes and a comparative advantage in the production of hairbrushes.
hairbrushes and a comparative advantage in the production of toothbrushes.
hairbrushes and a comparative advantage in the production of hairbrushes.
a.toothbrushes and a comparative advantage in the production of toothbrushes.
b.toothbrushes and a comparative advantage in the production of hairbrushes.
c.hairbrushes and a comparative advantage in the production of toothbrushes.
d.hairbrushes and a comparative advantage in the production of hairbrushes.
Explanation / Answer
a. is correct
Zimbabwe has absolute advantage in producing toothbrush as less number of labor hours are needed to produce it.
Zimbabwe's opportunity cost of producing toothbrush is 3/10= 0.3
Portugal's opportunity cost of producing toothbrush is 5/6=0.83
Zimbabwe's opportunity cost of producing toothbrush is lower. So Zimbabwe has comparative advantage in toothbrush.
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