Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available. Who has a comparative advantage in the production of clothes? Who has a comparative advantage in the production of cars? What is the opportunity cost for cars?

Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available. Who has a comparative advantage in the production of clothes? Who has a comparative advantage in the production of cars? What is the opportunity cost for cars?

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Description: Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available.Who has a comparative advantage in the production of clothes?Who has a co

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 2P

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

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Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available.

Who has a comparative advantage in the production of clothes?
Who has a comparative advantage in the production of cars?
What is the opportunity cost for cars?

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