q50c- Explain who should grow apples and who should grow wheat using the concept of comparative advantage. Who is the buyer on the market for wheat? Who is the seller? Question 1. Comparative AdvantageThe concept of comparative advantage shows that as long as two agents have different opportunity costs in the production of different goods, there will be room for both of them to benefitfrom trade if they specialise.Suppose that there are only two people, Greta and Carlos, who can grow apples and wheat. Their production possibilities when they specialise in the production of either good is given in thebelow table.Production if 100% of time is spent on one goodGreta800 apples or 40 tonnes of wheatCarlos600 apples or 15 tonnes of wheat

Answer: Let us first find the opportunity cost of producing apples and wheat for Greta: If Greta…

Answered: q50c- Explain who should grow apples…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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q50c- Explain who should grow apples and who should grow wheat using the concept of comparative advantage. Who is the buyer on the market for wheat? Who is the seller?

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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