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I know the answer is D, but how did you get that? United States Mexico Hamburger

ID: 1133877 • Letter: I

Question

I know the answer is D, but how did you get that?

United States Mexico Hamburgers 0 20 40 60 Tacos 54 36 18 0 Hamburgers 0 4 Tacos 30 20 10 0 12 14. Suppose the United States is currently producing 40 tons of hamburgers and 18 tons of tacos and Mexico is currently producing 8 tons of hamburgers and 10 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which each has a comparative advantage), then a total of hamburgers can be produced for the two countries combined and a total of additional ton(s) of tacos can be produced. additional ton(s) of a. 60; 30 b. 12; 54 c. 20; 20 d. 12; 2 e. 6; 2

Explanation / Answer

Answer
The opportunity cost of a good=Maximum production of other good/maximum production of the good
The opportunity cost of Hamburgurr to US =54/60=0.9 Tacos
The opportunity cost of Hamburger to mexico=30/12=2.5 Tacos
The specialization for trade is the basis on the comparative advantage and that depends on the opportunity cost as the opportunity cost of a hamburger is lower for the US so the US will Specialize in the Hamburger and Mexico in Tacos
Specialisation means producing maximum what the country can produce.
So the US will produce 60 hamburger and Mexico 30 Tacos
and before specialization it was
US 40 hamburgers and 18 tacos and Mexico 8 hamburgers and 10 Tacos
So the old production of Hamburger is =40+8=48 and Tacos=18+10=28
the increase after specialisation=60-48=12 Hamburgers and 30-28=2 Tacos
Option D


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