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Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:

A. Canada has a comparative advantage in the production of hockey sticks.
B. Germany has a comparative advantage in the production of hockey sticks.
C. Canada has an absolute advantage in the production of maple syrup.
D. Germany has an absolute advantage in the production of maple syrup.

User Techgnosis
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2 Answers

2 votes

Final answer:

Canada can produce more hockey sticks than Germany, hence it has the absolute advantage. However, Germany has a comparative advantage in producing hockey sticks because it has a lower opportunity cost for producing hockey sticks compared to Canada.

Step-by-step explanation:

To determine who has the absolute advantage in production, we look at who can produce more of a product with the same resources. Canada is able to produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce only 90,000 hockey sticks or the same 10,000 gallons of maple syrup. Therefore, Canada has an absolute advantage in producing hockey sticks, and there's no absolute advantage in maple syrup production as both countries produce the same amount.

To determine who has the comparative advantage, we need to compare the opportunity costs of producing one good over the other in each country. For hockey sticks, Canada must give up 100,000/10,000 = 10 gallons of maple syrup per hockey stick, while Germany must give up 90,000/10,000 = 9 gallons of maple syrup per hockey stick. Therefore, Germany has a comparative advantage in producing hockey sticks because it has a lower opportunity cost.

Given this information, the correct answer is B. Germany has a comparative advantage in the production of hockey sticks.

User Mehmet Guloglu
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4.4k points
6 votes

Answer:

A. Canada has a comparative advantage in the production of hockey sticks.

Step-by-step explanation:

The computation is shown below:

For Canada

The Opportunity cost of Hockey is

= 10000 ÷ 100000

= 0.1 gallons of maple syrup

For Germany

The Opportunity cost of Hockey is

= 10000 ÷ 90000

= 0.11 gallons of maple syrup

So based on this, the option A is correct

And, the same is to be considered

Therefore all the other options would be wrong

User Trobrock
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4.6k points