Based on the chart above which country as the comparative advantage in good A? B

Question

Based on the chart above which country as the comparative advantage in good A?

Based on the chart above which country as the comparative advantage in good B?

Based on the chart above which country as the absolute advantage in good A?

Based on the chart above which country as the absolute advantage in good B?

1). Country 1 ; Country 2 ; Country 2 ; Country 2

2). Country 1 ; Country 2 ; Country 1 ; Country 2

3). Country 2 ; Country 1 ; Country 1 ; Country 1

4). Country 2 ; Country 1 ; Country 2 ; Country 2

Explanation / Answer

Ans

1). Country 1 ; Country 2 ; Country 2 ; Country 2

Explanation

Opportunity cost of Country 1 for good A in terms of B is 0.4, while for country 2 it is 0.57

since the opportunity cost of 1 is lower then it have CA in good A where as country 2 has CA for good B.

in both goods country 2 produce more so it has absolute advantage.

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