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Homework answers / question archive / Use the information in the table below to answer the following questions

Use the information in the table below to answer the following questions

Economics

Use the information in the table below to answer the following questions.

production per unit of labor

  U.S. Argentina
wheat 300 20
beef 100 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

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a. The U.S. has an absolute advantage in the production of wheat and beer. It is able to a larger volume of both than Argentina.

b. The opportunity cost of wheat in the U.S. is 1/3 and the opportunity cost of wheat in Argentina is 1.

c. The opportunity cost of beef in the U.S. is 3 and the opportunity cost of beef in Argentina is 1.

d. The U.S. has a lower opportunity cost of wheat than Argentina so the U.S. has a comparative advantage in Wheat and Argentina has a comparative advantage in beef for the same reason. This means that the U.S. will trade Wheat and Argentina will trade beef with each other.