Answered: Refer to Table 3-5. Which country has a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to Table 3-5. Which country has a comparative advantage in each product?

Canada has a comparative advantage in airplanes, and Japan has a comparative advantage in neither good.

Canada has a comparative advantage in cars, and Japan has a comparative advantage in airplanes.

Canada has a comparative advantage in airplanes, and Japan has a comparative advantage in cars.

Canada has a comparative advantage in neither good, and Japan has a comparative advantage in cars.

Table 3-5
Canada
Japan
Labour hours needed
to make 1 unit:
Cars
30
40
Airplanes
120
160
Amount produced in
24 hours:
Cars
54
60
Airplanes
18
15

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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