Subject: Microeconomics
Example A:
Labor Hours Required to Produce One Unit
Coffee Wine
Argentina 4 8
Columbia 1 12
- Which country has an absolute advantage in wine?
- Which country has an absolute advantage in coffee?
- What is the opportunity cost of wine in each country?
- What is the opportunity costs of coffee in each country?
- Which country has a comparative advantage in wine?
- Which country has a comparative advantage in coffee?
Example B:
Labor Minutes Required to Produce One Unit
Germany Poland
Meat 40 min. 90 min.
Potatoes 10 min. 30 min.
- Which country has an absolute advantage in meat?
- Which country has an absolute advantage in potatoes?
- What is the opportunity cost of meat in each country?
- What is the opportunity costs of potatoes in each country?
- Which country has a comparative advantage in meat?
- Which country has a comparative advantage in potatoes?
Example C
If Jason can wash a car in 15 minutes and wash a dog in 15 minutes, and Megan can wash a car in 20 minutes and wash a dog in 10 minutes, who has an absolute advantage in each? Who has a comparative advantage in each?
Example D
Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Who has an absolute advantage in each? Who has a comparative advantage in each?