3. Consider the following table that presents the labour requirements for production in the East and West (labour hours per unit of output) Food Clothing East 10 20 West 5 15 Answer the following questions. a. Does the East have an absolute advantage in clothing production? Does the West have an absolute advantage in clothing production? Does the East have an absolute advantage in food production? Does the West have an absolute advantage in clothing production? Explain. b. Does the East have a comparative advantage in clothing production? Does the West have a comparative advantage in clothing production? Does the East have a comparative advantage in food production? Does the West have a comparative advantage in clothing production? Explain. c. In the West, what is the opportunity cost of producing one more unit of food? In the East, what is the opportunity cost of producing one more unit of food? Explain.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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3. Consider the following table that presents the labour requirements for production in the
East and West (labour hours per unit of output)
Food
Clothing
East
10
20
West
5
15
Answer the following questions.
a. Does the East have an absolute advantage in clothing production? Does the West
have an absolute advantage in clothing production? Does the East have an absolute
advantage in food production? Does the West have an absolute advantage in clothing
production? Explain.
b. Does the East have a comparative advantage in clothing production? Does the West
have a comparative advantage in clothing production? Does the East have a
comparative advantage in food production? Does the West have a comparative
advantage in clothing production? Explain.
c. In the West, what is the opportunity cost of producing one more unit of food? In the
East, what is the opportunity cost of producing one more unit of food? Explain.
Transcribed Image Text:3. Consider the following table that presents the labour requirements for production in the East and West (labour hours per unit of output) Food Clothing East 10 20 West 5 15 Answer the following questions. a. Does the East have an absolute advantage in clothing production? Does the West have an absolute advantage in clothing production? Does the East have an absolute advantage in food production? Does the West have an absolute advantage in clothing production? Explain. b. Does the East have a comparative advantage in clothing production? Does the West have a comparative advantage in clothing production? Does the East have a comparative advantage in food production? Does the West have a comparative advantage in clothing production? Explain. c. In the West, what is the opportunity cost of producing one more unit of food? In the East, what is the opportunity cost of producing one more unit of food? Explain.
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