1. Suppose two nations, Beta and Gamma, each make aircraft and corn. The main resource in each nation is hours of "labor". Production occurs in each nation according to the following table. With one hour, a worker in each nation can produce the following: Table showing Aircraft and Corn produced per hour Aircraft Corn 500 per Beta 1 per hour hour 300 per Gamma 2 per hour hour What is the opportunity cost of each good (in terms of the other good) for each nation? Try creating a small table of the opportunity costs such as this: Beta: 1 aircraft = corn 1 corn = aircraft Gamma: 1 aircraft = corn 1 corn = aircraft Which nation has the Absolute Advantage in aircraft? Which nation has the Absolute Advantage in corn? Which nation has the Comparative Advantage in aircraft? Which nation has the Comparative Advantage in corn?

1. Suppose two nations, Beta and Gamma, each make aircraft and corn. The main resource in each nation is hours of "labor". Production occurs in each nation according to the following table. With one hour, a worker in each nation can produce the following: Table showing Aircraft and Corn produced per hour Aircraft Corn 500 per Beta 1 per hour hour 300 per Gamma 2 per hour hour What is the opportunity cost of each good (in terms of the other good) for each nation? Try creating a small table of the opportunity costs such as this: Beta: 1 aircraft = corn 1 corn = aircraft Gamma: 1 aircraft = corn 1 corn = aircraft Which nation has the Absolute Advantage in aircraft? Which nation has the Absolute Advantage in corn? Which nation has the Comparative Advantage in aircraft? Which nation has the Comparative Advantage in corn?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 4PA

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