Answered: Consider the production productivity…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter21: International Trade And Finance

Section: Chapter Questions

Problem 2SQ

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Question

Consider the production productivity matrix of two goods from the US and India:

	United States of America	India
Labor force	200	800
Labor per unit corn	8	50
Labor per unit automobile	10	40

6. In India, how many units of corn is it willing to give-up to produce a unit of automobile?

Group of answer choices

0.8
1.25
Both 0.8 and 1.25
Not enough data

7. The US, to achieve comparative advantage in producing a unit of corn, need to give-up how many unit(s) of automobile?

Group of answer choices

0.8
1.25
Both 0.8 and 1.25
Not enough data

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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