Opportunity cost and specialization.

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Chapter 26.2, Problem 4QQ

To determine

Opportunity cost and specialization.

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Exercise: production per unit of labour: US: Wheat 300, Beef 100 Argentina: Wheat 20, Beef 20 a. Does either country have an absolute advantage in the production of wheat or beef? Explain b. What is the opportunity cost of wheat in each country? c. What is the opportunity cost of beef in each country? d. Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.

Q) When a country has a comparative advantage in producing a certain good, A: the country should import that good. B: the country should produce just enough of that good for its own consumption. C:the country’s opportunity cost of that good is high relative to other countries’ opportunity costs of that same good. D: then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier

a.) Looking at the graphs, which nation has a stronger preference for 'Y'? Explain. b.) Looking at the graphs, which nation has comparative advantage in producing good 'X'. Why? c.) What do the points A and A' on the graphs represent? Explain.