Question

Person A Good X Good Y 200 0 150 100 100 50 150 0 200

Person B Good X Good Y 0 120 40 90 80 60 120 30 160 0
Person A can produce the following combinations of X and Y: 200X and 0Y, 150X and 50Y, 100X and 100Y, 150X and 50Y, or 200X and 0Y. Person B can produce the following combinations of X and Y: 0X and 120Y, 40X and 90Y, 80X and 60Y, 120X and 30Y, or 160X and 0Y. Person A has the comparative advantage in the production of _ and person B has the comparative advantage in the production of __.
a. XY
b. YX
c. neither good Xnor good Y; neither good Xnor good Y
d. both good X and good Y; neither good X nor good Y
e. neither good X nor good Y; both good X and good Y

Answer 1

b. YX

Step-by-step explanation:

In the case of A,

To generate 50 X ,

give up = 50 Y

Therefore opportunity cost of 1 X = 1Y

In the case of B

To generate 40 X,

give up 30 Y

Therefore opportunity cost of 1 X = 3 ÷4 Y

Therefore B has a Comparative advantage in X

And, A has Comparative Advantage in Y