Question

Brazil can produce 100 pounds of beef or 10 autos. In contrast, the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef in Brazil? What is the opportunity cost of producing one pound of beef in the United States?

a) Brazil in beef, U.S. in autos; 1 auto, 1/4 auto; 1/30 auto, 3/40 auto
b) U.S. in beef, Brazil in autos; 1/4 auto, 1 auto; 3/40 auto, 1/30 auto
c) Brazil in beef, U.S. in autos; 1/30 auto, 3/40 auto; 1 auto, 1/4 auto
d) U.S. in beef, Brazil in autos; 3/40 auto, 1/30 auto; 1/4 auto, 1 auto

Answer 1

Brazil has the absolute advantage in beef, and the U.S. has the absolute advantage in autos. The opportunity cost of producing one pound of beef is 1/10 of an auto in Brazil and 3/4 of an auto in the U.S.

Step-by-step explanation:

Brazil has the absolute advantage in producing beef because it can produce more beef (100 pounds) compared to the United States, which can only produce 40 pounds. On the other hand, the United States has the absolute advantage in producing autos because it can produce more autos (30) than Brazil, which can produce only 10 autos.

As for the opportunity cost of producing one pound of beef, in Brazil, the cost is 1/10 of an auto. This is because if Brazil decides to produce one more pound of beef, they have to give up producing 1/10 of an auto (since 10 autos equal 100 pounds of beef). Meanwhile in the United States, the opportunity cost of producing one pound of beef is 3/4 of an auto. This is due to the opportunity cost of having to forego producing 3/4 of an auto for every additional pound of beef (since 30 autos equal 40 pounds of beef).