Table 34-3

Output Per Unit Labor Input

Cotton
Wheat
Egypt
10
2
United States
20
20
-The data in Table 34-3 indicate that the United States has

Question

Table 34-3
​
​
Output Per Unit Labor Input
​
Cotton
Wheat
Egypt
10
2
United States
20
20
-The data in Table 34-3 indicate that the United States has

Quizplus · Accepted Answer

The United States has an absolute advantage in both cotton and wheat since it can produce more of both goods with the same amount of labor input than Egypt. However, the United States has a comparative advantage in wheat because it has a lower opportunity cost of producing wheat (1 unit of wheat for every 1 unit of cotton) compared to Egypt (5 units of wheat for every 1 unit of cotton). So, the United States should specialize in producing wheat and trade with Egypt for cotton, where Egypt has a comparative advantage.

Table 34-3 ​

Table 34-3