Question

The nations of Grapefruit Land and Peachland produce grapefruits and peaches. In Grapefruit And, there are 650,000 hours of labor available in a month, and it takes 2 hours of labor to produce a barrel of grapefruits, and 4 hours of labor to produce a crate of peaches. In Peachland, there are 350,000 hours of labor available in a month, and it takes 1 hour of labor to produce a barrel of grapefruits and 2 hours of labor to produce a crate of peaches.

Required:
a. Which country has an absolute advantage in each good?
b. What is the opportunity cost of a crate of peaches in Grapefruitland?
c. What is the opportunity cost of a crate of peaches in Peachland?
d. Which country has a comparative advantage in each good?

Answer 1

Peachland has absolute advantage in the production of grape fruis and peaches

grapefruits = 2

peaches = 0.5

Peachland

grapefruits = 2

peaches = 0.5

None of the countries have a comparative adantage in the production of either goods

Step-by-step explanation: