Question

Alabama and Mississippi each have 9 units of labor. They can use their units of labor for the production of chickens and cotton. Alabama can produce 3 units of chicken for each unit of labor, and 7 units of cotton for each unit of labor. Mississippi can produce 4 units of chicken for each unit of labor, and 6 units of cotton for each unit of labor. Given this information, complete the following problems.Round answers to decimal places where applicable. has the absolute advantage for producing chickens. has the absolute advantage for producing cotton. Alabama's opportunity cost for producing a unit of chicken is units of cotton Alabama's opportunity cost for producing a unit of cotton is units of chicken Mississippi's opportunity costs for producing a unit of chicken is units of cotton Mississippi's opportunity cost for producing a unit of cotton is units of chicken. has the comparative advantage for producing chicken. has the comparative advantage for producing cotton should produce chicken and should produce cotton

Answer 1

Answer and Explanation:

As it is given that

1. For each unit of labor, Alabama will generate 3 units of chicken.

Thus Alabama can produce a maximum of 27 units of chicken with 9 units of labor.

2. With every unit of labor, Alabama will generate 7 units of cotton.

Thus Alabama can produce a maximum of 63 units of cotton with 9 units of labor.

For each unit of labor, Mississippi will generate 4 units of chicken.

Therefore Mississippi can produce a maximum of 36 units of chicken with 9 units of labor.

For each unit of labor, Mississippi will produce 6 units of cotton.

While Mississippi can produce up to 54 units of cotton with 9 units of labor.

Alabama could be seen producing more cotton than Mississippi using all the labor while using all the labor Mississippi can produce more chicken than Alabama.

Hence,

For producing chicken, Mississippi has the absolute advantage

For producing cotton, Alabama has the absolute advantage

Now

Albama's opportunity cost for generating a chicken unit is

= (7 ÷ 3)

= 2.33 units of cotton.

Albama's opportunity cost for generating a cotton unit is

= (3 ÷ 7)

= 0.43 units of chicken.

Mississippi's opportunity cost for generating a chicken unit is

= (6 ÷ 4)

= 1.50 units of cotton.

Mississippi's opportunity cost of generating a cotton unit is

= (4 ÷ 6)

= 0.67 units of chicken

Therefore

Alabama can produce cotton relatively to Mississippi at a lower cost of opportunity.

In comparison with Alabama, Mississippi can produce chicken at lower opportunity costs.

Hence, we can conclude that

Mississippi has a competitive advantage for chicken production.

Alabama has a competitive advantage in cotton production.

Mississippi is supposed to grow chicken and Alabama is supposed to make cotton.