Two countries produce two goods and they each have 3 million hours of labor. Consider the table that shows the quantity produced per labor hour: ShirtsCorn (bushels)Alpha412Beta210If each country specializes in the good for which it has a comparative advantage then in total the two countries can together produce million shirts and million bushels of corn. Enter whole numbers.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Two countries produce two goods and they each have 3 million hours of labor. Consider the table that shows the quantity produced per labor hour:

	Shirts	Corn (bushels)
Alpha	4	12
Beta	2	10

If each country specializes in the good for which it has a comparative advantage then in total the two countries can together produce million shirts and million bushels of corn. Enter whole numbers.

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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