Eastland and Westland produce only two goods, boxes of peaches and boxes of oran

Question

Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. Look at the figure Comparative Advantage. Eastland has an absolute advantage in producing: oranges only. peaches only. both oranges and peaches. neither oranges nor peaches. Look at the figure Comparative Advantage. Westland has an absolute advantage in producing: oranges only. peaches only. both oranges and peaches. neither oranges nor peaches.

Explanation / Answer

(21) (a)

Eastland produces 100 oranges & 100 peaches, and Westland produces 50 oranges & 200 peaches. So Eastland has absolute advantage in oranges only.

(22) (B)

Let's compute opportunity costs (OC):

In Eastland,

OC of orange = 100/100 = 1 peach

OC of peach = 100/100 = 1 orange

In Westland,

OC of orange = 200/50 = 4 peach

OC of peach = 50/200 = 0.25 orange

Since Westland can produce peaches at a lower OC than Eastland can (0.25 < 1), Westland has comparative advantage in peaches.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.