### Analysis of Comparative and Absolute Advantage in Production**Using the data presented in the table below, answer the following questions:****a) Which country has a comparative advantage in the production of apples and oranges? Explain and show work.****b) Which country has an absolute advantage in the production of apples and oranges?****c) Which country should specialize in the production of apples and oranges? Explain why (points).**#### Production per Worker:| Country | Apples | Oranges ||---------|--------|---------|| U.S. | 100 | 300 || Mexico | 600 | 150 |### Explanation:**a) Comparative Advantage:**Comparative advantage is determined by comparing the opportunity costs of producing goods between countries.- For the U.S.: - The opportunity cost of producing 1 apple in terms of oranges: \(\frac{300 \text{ oranges}}{100 \text{ apples}} = 3 \text{ oranges per apple}\) - The opportunity cost of producing 1 orange in terms of apples: \(\frac{100 \text{ apples}}{300 \text{ oranges}} \approx 0.33 \text{ apples per orange}\)- For Mexico: - The opportunity cost of producing 1 apple in terms of oranges: \(\frac{150 \text{ oranges}}{600 \text{ apples}} = 0.25 \text{ oranges per apple}\) - The opportunity cost of producing 1 orange in terms of apples: \(\frac{600 \text{ apples}}{150 \text{ oranges}} = 4 \text{ apples per orange}\)Comparative advantage:- The U.S. has a lower opportunity cost for producing oranges (0.33 apples per orange) compared to Mexico (4 apples per orange). Therefore, the U.S. should specialize in producing oranges.- Mexico has a lower opportunity cost for producing apples (0.25 oranges per apple) compared to the U.S. (3 oranges per apple). Therefore, Mexico should specialize in producing apples.**b) Absolute Advantage:**Absolute advantage is determined by comparing the productivity (output per worker) directly.- For apples: - The U.S. produces 100 apples per worker. - Mexico produces 600 apples per worker. - Mexico has an absolute advantage in apple production.- For oranges

"If a country has a comparative advantage in producing one commodity then it means that country can…

Using the data presented in the table below answer the followings: a) which country has comparative advantage in the production of apples, oranges? Explain and show worn b) which country has an absolute advantage in the production of apples, oranges? c) Which country should specialize in the production of apples, oranges? Explain why points) Production per worker: Oranges U.S. 300 Mexico 150 Apples 100 600

Using the data presented in the table below answer the followings: a) which country has comparative advantage in the production of apples, oranges? Explain and show worn b) which country has an absolute advantage in the production of apples, oranges? c) Which country should specialize in the production of apples, oranges? Explain why points) Production per worker: Oranges U.S. 300 Mexico 150 Apples 100 600

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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