Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:Question 48 options: Canada has a comparative advantage in the production of hockey sticks. Germany has a comparative advantage in the production of hockey sticks. Canada has an absolute advantage in the production of maple syrup. Germany has an absolute advantage in the production of maple syrup.

The businesses, and producers are considered to be the suppliers who makes up the supply side of the markets. The firms use various factors of production in order to produce goods, and services. This is done with the motive maximizing the level of their revenue, and profits. The suppliers take into account the needs, wants, and taste and preferences of consumers while making production decisions.Comparative advantage refers to the phenomenon in which an entity is able to produce a good, or a service at lower opportunity cost as compared to its other competitors in the market. In the given case, we are given two nations Canada, and Germany, who are involved in the production of two items, maple syrup, and hockey sticks. Canada:100,000 hockey sticks = 10,000 gallons of maple syrup1 hockey stick = 1/10 gallons of maple syrupGermany:90,000 hockey sticks = 10,000 gallons of maple syrup1 hockey stick = 1/9 gallons of maple syrupCanada:10,000 gallons of maple syrup = 100,000 hockey sticks1 gallon of maple syrup = 10 hockey sticksGermany:10,000 gallons of maple syrup = 90,000 hockey sticks1 gallon of maple syrup = 9 hockey sticks This shows that Canada has comparative advantage in production of hockey sticks, while Germany has comparative advantage in the production of maple syrup. Hence, the answer is (a). Option (b) is incorrect because, Germany has comparative advantage in production of maple syrup. Option (b) is incorrect because, none of the nations have absolute advantage in production of maple syrup. Option (b) is incorrect because, neither Canada, nor Germany has absolute advantage in production of maple syrup.

Answered: Suppose that Canada can produce 100,000…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:

Question 48 options:

	Canada has a comparative advantage in the production of hockey sticks.
	Germany has a comparative advantage in the production of hockey sticks.
	Canada has an absolute advantage in the production of maple syrup.
	Germany has an absolute advantage in the production of maple syrup.

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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