Compute the opportunity cost, absolute advantage, comparative advantage.
Absolute and Comparative Advantage
You have the following information concerning the production of wheat also cloth in the United States and the United Kingdom:
Labor Hours Required to Produce One Unit
|
|
United Kingdom
|
United States
|
|
Wheat
|
2
|
1
|
|
Cloth
|
6
|
5
|
- What is the opportunity cost of producing a unit of wheat in the United Kingdom? In the United States?
- Which country has an absolute advantage in producing wheat? In producing cloth?
- Which country has a comparative advantage in producing wheat? In producing cloth?
Which country should specialize in producing wheat? In producing cloth?