Answered: Consider the information in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the information in the attached table, complete the sentence with the correct alternative:
Samuel has a comparative advantage in the production of ___________________ and Olivia has a comparative advantage in the production of ____________________________.
a. Wheat, wheat
b. Wheat, pork
c. Pig, wheat
d. Pig, pork
Note: make your own calculations to verify the solution.

Time needed to produce
1 bag of wheat 1 kilo of pork
Samuel
20
12
Olivia 15
10

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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