Question

Question 18 5 out of 5 points china australia steel (tons) cars steel (tons) cars 630 0 1120 0 600 700 900 300 400 1200 600 500 200 1500 300 600 0 1600 0 650 the figures in the above table give five alternative combinations of steel and cars that china and australia can produce if they fully use all their factors of production. in autarky, china produces 600 tons of steel and 700 cars while australia produces 300 tons of steel and 600 cars. based on the relative prices (mrt) at autarky, which country has the comparative advantage in cars?

Answer 1

The country which has comparative advantage in car production is AUSTRALIA.
Comparative advantage refers to how efficiently a particular company or country is producing a particular product compare to another country or company.
From the question given here, it can be seen that the ratio of car to steel of Australia is lower than that of China, which means that Australia has a comparative advantage in producing cars, it has a lower opportunity cost for producing cars compare to Australia.