Please help I have answered 1 question out of 4. I am stuck Q.2.2 The information in Table 2-2 shows the production of tables and chairs, perworker, in two countries. Use this information to answer Q.2.2.1 to Q.2.2.3.Product per workerTablesChairsTable 2-2South Africa100 units50 unitsNigeria40 units10 unitsQ.2.2.1 Calculate the opportunity costs of producing tables in South Africaand in Nigeria. Show your calculations.Q.2.2.2 Which country has an absolute advantage in the production of tables?Justify your answer.Q.2.2.3 Explain which product each of the countries should specialise in andexport. Use the information relating to comparative advantage tosupport your answer.

Answered: The information in Table 2-2 shows 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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Please help I have answered 1 question out of 4. I am stuck

Q.2.2 The information in Table 2-2 shows the production of tables and chairs, per
worker, in two countries. Use this information to answer Q.2.2.1 to Q.2.2.3.
Product per worker
Tables
Chairs
Table 2-2
South Africa
100 units
50 units
Nigeria
40 units
10 units
Q.2.2.1 Calculate the opportunity costs of producing tables in South Africa
and in Nigeria. Show your calculations.
Q.2.2.2 Which country has an absolute advantage in the production of tables?
Justify your answer.
Q.2.2.3 Explain which product each of the countries should specialise in and
export. Use the information relating to comparative advantage to
support your answer.

Expert Solution

Step 1

Comparative advantage, absolute advantage, and opportunity costs are some of the most important topics in trade theory. Absolute advantage tells us which country produces more quantity given the same resources and same goods. It is just the quantity of output that matters in absolute advantage. In comparative advantage, we check that compared to the other good produced by a country which is cheaper to make. For this, we calculate the opportunity costs and the country with a lower opportunity cost has the comparative advantage in that good.

Opportunity cost formula:

Country A's opportunity cost of Good X = $\frac{T o t a l P r o d u c t i o n o f G o o d Y i n c o u n t r y A}{T o t a l P r o d u c t i o n o f G o o d X i n c o u n t r y A}$

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