The following table shows the production of cows’ milk and potatoes per unit of input in the hypothetical countries of St. Claire and St. Paul. Use the following table to answer the questions. St. ClaireSt. PaulCow’s Milk100 liters50 litersPotatoes150 liters60 kilosa) What is the opportunity cost of producing one liter of cows’ milk in St. Paul?b) Which country has the comparative advantage in the production of cows’ milk?c) What is the opportunity cost of producing one kilo of potatoes in St. Claire?

St. Claire St. Paul Cow's milk 100 litres 50 litres Potatoes 150 kilos 60 kilos

Answered: The following table shows the…

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 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...

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The following table shows the production of cows’ milk and potatoes per unit of input in the hypothetical countries of St. Claire and St. Paul. Use the following table to answer the questions.

	St. Claire	St. Paul
Cow’s Milk	100 liters	50 liters
Potatoes	150 liters	60 kilos

a) What is the opportunity cost of producing one liter of cows’ milk in St. Paul?

b) Which country has the comparative advantage in the production of cows’ milk?

c) What is the opportunity cost of producing one kilo of potatoes in St. Claire?

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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