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Homework answers / question archive / GELECEK Emre 1 pdf 15
GELECEK Emre 1 pdf 15. Consider the case of two countries, Mauritius and South Africa, both producing rum and cloth. If all resources are fully and efficiently employed, one worker in Mauritius can produce 270 units of rum or 30m of cloth per week, while one worker in South Africa can produce 320 units of rum or 40m of cloth per week. Rum Cloth Mauritius 270 30 South Africa 320 40 14 marks Based on this informabon A South Africa has an absolute advantagen the production of rum only B Mauritus should mport run from South Africa C Mauritius has a comparative advantage n the production of cloth DSouth Africa should export dom to Maunties 10. The macroeconomic view of a trade deficit implies that other things equal the motion w
Answer:- Its correct option is C. i.e,
Maruitius has comparaitive advantage in production of cloth.
Reason:- If Maruitius produce Rum then it has opportunity cost 270/30=9 of cloths
If South Africa produce Rum then it has opportunity cost 320/40=8 of cloths
Therefore, south Africa has comparative advantage in production of Rum.
• If Maruitius produce cloths then it has opportunity cost 30/270=0.11 of Rum
If South Africa produce cloths then it has opportunity cost 40/320= 0.125 of Rum
Therefore, Maruitius has comparative advantage in production of cloths.
