Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country B has a comparative advantage at producing:
A) iPhones.
B) iPads.
C) both iPhones and iPads.
D) neither iPhones nor iPads.

Question

Quizplus · Accepted Answer

To determine which country has a comparative advantage in producing which product, we need to calculate the opportunity cost of producing each product in each country.

For Country A:
- If a worker makes 10 iPhones, the opportunity cost of producing 1 iPhone is 0.5 iPad (since the worker could have instead made 5 iPads).
- If a worker makes 5 iPads, the opportunity cost of producing 1 iPad is 2 iPhones (since the worker could have instead made 10 iPhones).

For Country B:
- If a worker makes 2 iPhones, the opportunity cost of producing 1 iPhone is 5 iPads (since the worker could have instead made 10 iPads).
- If a worker makes 10 iPads, the opportunity cost of producing 1 iPad is 2 iPhones (since the worker could have instead made 2 iPhones).

Comparing the opportunity costs, we see that Country A has a comparative advantage in producing iPads (since their opportunity cost of producing 1 iPad is lower than that of Country B), while Country B has a comparative advantage in producing iPhones (since their opportunity cost of producing 1 iPhone is lower than that of Country A). Therefore, the answer is B - iPads.

Suppose That a Worker in Country a Can Make Either