Labor hours to produce one unit United Kingdom United States wheat 2 1 cloth 6 5
ID: 1177345 • Letter: L
Question
Labor hours to produce one unit
United Kingdom United States
wheat 2 1
cloth 6 5
a. what is the opportunity cost of producing a unit of wheat in the united kingsom? In the united states?
b. which country has an absolute advantage in producing wheat? In producing cloth?
c. which country has a comparative advantage in producing wheat? In producing cloth?
d. which country should specialize in producing wheat? In producing cloth?
e. provide some examples of specialized markets or retail outlets. What makes the web so conducive to specialization?
Explanation / Answer
This is the way my Econ 101 professor preferred that I write these....hopefully that is true for you as well.A. Opportunity cost of producing a unit of wheat in the U.K. is 1/3 a unit of cloth. Cost of producing a unit of wheat in the U.S. is 1/5 of a unit of cloth.
B. The U.S. has an absolute advantage in producing both wheat and cloth.
C. The U.S. has a comparative advantage in producing wheat. The U.K. has a comparative advantage in producing cloth.
D. The US should produce wheat and the UK should produce cloth. J.R. Kearl, Economics and Public Policy Textbook.
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