Question

The tiny isolationist nations of Lorland and Zhangia are considering opening their borders to trade with each other. Both nations produce only two goods: smoothies and sandals. Currently, a worker in Lorland can produce 2 smoothies per day or 8 sandals per day, while a worker in Zhangia can produce 1 smoothie per day or 5 sandals per day. Using this information, please match each nation and good to the most accurate description.

Write each item to its matching item .
a. the nation that will specialize in producing smoothies once trading begins
b. the nation that will specialize in producing sandals once trading begins
c. the good that Lorland will import from Zhangia after trading begins
d. the good that Lorland will export to Zhangia after trading begins
Zhangia Sandals Smoothies Lorland

Answer 1

Lorland

Zhangia

sandals

smoothies

Step-by-step explanation:

A country should specialise goods for which it has a comparative advantage in its production.

A country should import goods for which it has no comparative advantage in its production.

A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries.

Lorland

Opportunity cost in the production of one smoothie = 8/2 = 4

Opportunity cost in the production of one sandal = 2/8 = 0.25

Zhangia

Opportunity cost in the production of one smoothie = 5/1 = 5

Opportunity cost in the production of one sandal = 1/5 = 0.2

Zhangia has a comparative advantage inn the production of sandals and should specialise in the production of sandals while lorland has a comparative advantage in the production of smoothies specialise in the production of smoothies

Loriland should import sandals and export smoothies