lee and Tre produce two goods in an 8-hour day. lee can produce 10 capital or 55 consumables and  Tre can produce 75 capital and 60 consumables. Who has the absolute advantage I the production of consumables? Who has the absolute advantage in the production of capital? Who has a comparative advantage in the production of capital?

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Chapter33: International Trade
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lee and Tre produce two goods in an 8-hour day. lee can produce 10 capital or 55 consumables and  Tre can produce 75 capital and 60 consumables.

  • Who has the absolute advantage I the production of consumables?
  • Who has the absolute advantage in the production of capital?
  • Who has a comparative advantage in the production of capital?
  • Who has a comparative advantage in the production of consumables?
  • What is the opportunity cost for capital?
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