com iD QUESTION 18 Two countries, A & B, are each able to produce two products,
ID: 1134057 • Letter: C
Question
com iD QUESTION 18 Two countries, A & B, are each able to produce two products, widgets and zercs. Country A can produce 90 widgets or 45 zercs, or some combination of the two. Country B can produce 100 widgets or 100 zercs, or some combination of the two. Currently, Country A is consuming 60 widgets and Country B is consuming 60 widgets. Both countries agree that any gains from specialization will be shared equally. Also, the world-wide production of neither good may fall as a result of specialization. Fill in the blanks below. Use the cell numbers in the table as a guide. (For blanks requiring a fraction, please use a decmial, for example, use 5 for 1/2,.33 for 1/3 and.25 for 1/4) After Spec. After Spec. omp. Adv.W 13 19 14 16 18 #1 15 21 10 12 zerc(s). #3 widget(s). The cost of producing one zerc in Country A is #2 The cost of producing one widget in Country B is #3 The cost of producing one zero in Country B is #4 Country A has the comparative advantage in the production of #5 Country B has the comparative advantage in the production of #6 zerc(s). widget(s) (enter W or z) QUESTION 19Explanation / Answer
18.
The opportunity cost of producing one widget in country A = 45/90= 0.5 zercs
The opportunity cost of producing one zercs in country A = 90/45= 2 widgets
The opportunity cost of producing one widget in country B = 100/100 =1 zercs
The opportunity cost of producing one zercs in country B= 100/100= 1 widget
Country A has the comparative advantage in the production of widgets (W) because it has the lower opportunity cost in producing widgets.
Country B has the comparative advantage in the production of zercs (Z) because it has the lower opportunity cost for producing zercs.
Widgets Zercs Country A 90 45 Country B 100 100Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.