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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Robinson Crusoe can gather 10 coconuts or catch 1 fish per hour. His friend Friday can gather 30 coconuts or catch 2 fish per hour. What is Crusoe’s opportunity cost of catching 1 fish? What is Friday’s? Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish?

To determine

Crusoe’s absolute and comparative advantage.

Explanation

Crusoe’s opportunity cost of catching one fish is calculated as follows.

Crusoe's opportunity cost of one fish =Cost of coconutsCost of fish=101=10 coconuts

Thus, Crusoe’s opportunity cost of catching one fish is 10 coconuts

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