Suppose a worker in France can produce 7 loaves of bread or 4 shirts in a day an

Question

Suppose a worker in France can produce 7 loaves of bread or 4 shirts in a day and a worker in Germany can produce 11 loaves of bread or 5 shirts in a day. The opportunity cost of shirts in Germany is _____ loaves of bread.

5/11

11/5

4/7

7/4

Suppose a worker in Italy can produce 14 computers or 7 televisions in a day and a worker in the United States can produce 24 computers or 8 televisions in a day. Italy has a comparative advantage in ________ and the United States has a comparative advantage in ________ .

neither televisions nor computers; both televisions and computers

Suppose a worker in Peru can produce 5 lamps or 2 dressers in a day and a worker in Canada can produce 7 lamps or 3 dressers in a day. In order for trade to benefit both countries, a lamp would have to trade for between _______ and ______ dressers.

Explanation / Answer

a) The opportunity cost is 5/11 that means how many shirts per loaves of bread can be produced.

b) Italy has a comparative advantage in the production of computers and US has a comparative advantage in the production of television.

c) the trade should be more than 5 but less than 7 in the opportunity cost. The answer is 5/2; 7/3.

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