186k views
0 votes
Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country A should specialize in __________________ because they possess the ___________________ in the production of that good.

2 Answers

3 votes

Final answer:

In this scenario, workers in Country A should specialize in bananas while workers in Country B should specialize in tomatoes. Country A has the absolute advantage in bananas, and Country B has the absolute advantage in tomatoes.

Step-by-step explanation:

In this scenario, workers in Country A should specialize in bananas because they can produce more bananas per worker compared to tomatoes. They have a higher opportunity cost for producing tomatoes. Workers in Country B should specialize in tomatoes because they can produce more tomatoes per worker compared to bananas. They have a higher opportunity cost for producing bananas.

To determine which country has the absolute advantage in a particular good, we compare the productivity of each country in producing that good. Absolute advantage refers to the ability of a country to produce a good using fewer resources compared to another country.

In this case, the workers in Country A have a comparative advantage in producing bananas because they can produce 25 bananas per worker compared to 18 bananas per worker in Country B. Therefore, Country A has the absolute advantage in bananas.

On the other hand, the workers in Country B can produce 6 tomatoes per worker compared to 5 tomatoes per worker in Country A. Therefore, Country B has the absolute advantage in tomatoes.

User Neil Horton
by
8.4k points
5 votes

Answer: Bananas; Lower opportunity cost

Step-by-step explanation:

In country A:

Opportunity cost of producing a banana =
(5)/(25)

= 0.2 tomato

Opportunity cost of producing a tomato =
(25)/(5)

= 5 bananas

In country B:

Opportunity cost of producing a banana =
(6)/(18)

= 0.33 tomato

Opportunity cost of producing a tomato =
(18)/(6)

= 3 bananas

Hence, workers in country A should specialize in the production of Bananas because the opportunity cost of producing a banana is lower than the country B.

User Cambium
by
8.0k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.