Figure 1 shows if the United States specializes entirely in wine, it can produce

Question

Figure 1 shows if the United States specializes entirely in wine, it can produce 90,000 liters per month; if the United States specializes entirely in computers, it can produce 10,000 laptops per month. If France completely specializes in wine, it can produce 40,000 liters per month; if France completely specializes in computers, it can produce 8,000 laptops per month.

A.Given this information, the opportunity cost of one computer in France is __________, and the opportunity cost of one computer in the United States is __________.

B. Given this information, ________ has a comparative advantage in producing wine and ______ has a comparative advantage in producing computers.

Explanation / Answer

A.Given this information, the opportunity cost of one computer in France is 5 liters of wine ( i.e. 40/8) , and the opportunity cost of one computer in the United States is 9 liters of wine ( i.e. 90/10).

B. Given this information, US has a comparative advantage in producing wine and France has a comparative advantage in producing computers.

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