The question requires us to determine the tribe which has a
Explanation of Solution
The following table represents the units of spaghetti and meatballs produced by tribes:
Tribe | Spaghetti in pounds | Meatballs in pounds |
Tivoli | 30 | 50 |
Frivoli | 40 | 30 |
To determine the comparative advantage, we need to calculate the
In Tivoli:
The opportunity cost of producing one pound of spaghetti = 50/30 = 1.66 pounds of meatballs.
The opportunity cost of producing meatballs = 30/50 = 0.6 units of spaghetti.
In Frivoli:
The opportunity cost of producing spaghetti = 30/40 = 0.75 pounds of meatballs.
The opportunity cost of producing meatballs = 40/30 = 1.33 pounds of spaghetti.
The opportunity cost of producing spaghetti is lower in Frivoli. So, Frivoli has a comparative advantage in producing spaghetti.
Similarly, the opportunity cost of producing meatballs is lower in Tivoli. So, Tivoli has a comparative advantage in producing meatballs.
Thus, the option “c” is correct.
The country with lower opportunity cost of producing a product will have a comparative advantage in producing that product.
Chapter 1R Solutions
Krugman's Economics For The Ap® Course
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