Chapter 1R, Problem 12MCQ

To determine

The question requires us to determine the tribe which has a comparative advantage in producing meatball and spaghetti.

Explanation of Solution

The following table represents the units of spaghetti and meatballs produced by tribes:

Tribe	Spaghetti in pounds	Meatballs in pounds
Tivoli	30	50
Frivoli	40	30

To determine the comparative advantage, we need to calculate the opportunity cost.

In Tivoli:

The opportunity cost of producing one pound of spaghetti = 50/30 = 1.66 pounds of meatballs.

The opportunity cost of producing meatballs = 30/50 = 0.6 units of spaghetti.

In Frivoli:

The opportunity cost of producing spaghetti = 30/40 = 0.75 pounds of meatballs.

The opportunity cost of producing meatballs = 40/30 = 1.33 pounds of spaghetti.

The opportunity cost of producing spaghetti is lower in Frivoli. So, Frivoli has a comparative advantage in producing spaghetti.

Similarly, the opportunity cost of producing meatballs is lower in Tivoli. So, Tivoli has a comparative advantage in producing meatballs.

Thus, the option “c” is correct.

Economics Concept Introduction

The country with lower opportunity cost of producing a product will have a comparative advantage in producing that product.