Hello Please kindly only answer if you are a real economist ans sure 100% about
ID: 1143111 • Letter: H
Question
Hello
Please kindly only answer if you are a real economist ans sure 100% about the correct answer.
Use the information in the following table on labor productivities in the United Kingdom and the United States to answer questions a through f.
Output per Hour Worked
US
UK
Cloth
8 units
12 units
Wheat
9 units
10 units
1. Is there an absolute advantage for each country in wheat or cloth? Why?
2. Which country should specialize in wheat? In cloth? Explain your answer.
Output per Hour Worked
US
UK
Cloth
8 units
12 units
Wheat
9 units
10 units
Explanation / Answer
ANSWER:
1) No the absolute advantage is with UK with both commodities cloth and wheat as UK produces more cloth and wheat then US , that is (12 > 8 for cloth) and (10 > 9) for wheat.
2) For finding specialization , we need to find opportunity cost of each country for producing both the commodities.
US:
A) 1 unit of cloth = 9 / 8 units of wheat that is 1.125 units of wheat
b) 1 unit of wheat = 8 / 9 units of cloth that is 0.888 units of cloth.
UK:
A) 1 unit of cloth = 10 / 12 units of wheat that is 0.833 units of wheat
b) 1 unit of wheat = 12 / 10 units of cloth that is 1.2 units of cloth.
so US should produce wheat as it has an comparitive advantage in it while UK should produce cloth as it has an comparative advantage in cloth.
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