Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available.Who has a comparative advantage in the production of clothes?Who has a comparative advantage in the production of cars?What is the opportunity cost for cars?

Name: Suppose that in an hour an American worker can produce 200 clothes or
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Description: Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available.Who has a comparative advantage in the production of clothes?Who has a co

The international trade can be beneficial if the theories support the requirements by a country. The…

Answered: Suppose that in an hour an American…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 2P

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Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available.

Who has a comparative advantage in the production of clothes?
Who has a comparative advantage in the production of cars?
What is the opportunity cost for cars?

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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