Assume France and Mali can both produce grain and dates, and that the only limit

Question

Assume France and Mali can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries.
Each farmer in France can produce 10 metric tons of grain or 5 metric tons of dates in a season. Each farmer in Mali can also produce 10 metric tons of grain or 25 metric tons of dates. Please answer the four questions below.
1. Which country has the absolute advantage in producing dates?
2. Which country has the absolute advantage in producing grain?
3. Which country has the competitive advantage in producing dates?

Explanation / Answer

1.

Mali can produce more dates that France (25 metric ton > 5 metric ton), so Mali has absolute advantage in dates.

2.

Both Mali and France can produce 10 metric tons of grain each, so neither has absolute advantage in grain.

3.

Opportunity cost of dates in France = 10 ÷ 5 = 2 grain

Opportunity cost of dates in Mali = 10 ÷ 25 = 0.4 grain

Since Mali can produce grapes at a lower opportunity cost, it has comparative advantage in dates.

4.

Opportunity cost of grain in France = 5 ÷ 10 = 0.5 dates

Opportunity cost of grain in Mali = 25 ÷ 10 = 2.5 dates

Since France can produce grain at a lower opportunity cost, it has comparative advantage in grain.

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