a. Explain the comparative advantage based on illustration below? LaptopTabletOutput Per Hour of LaborUnited States46China15

Meaning of Opportunity Cost: The term opportunity cost refers to the situation under which the…

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Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 3SCQ: Are there other ways in which we can measure productivity besides the amount produced per hour of...

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a. Explain the comparative advantage based on illustration below?

Laptop
Tablet
Output Per Hour of Labor
United States
4
6
China
1
5

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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