(Figure: PPF Mexico & U.S.) Use the above figure in whichboth Mexico and the United States each have 24 units of labor.Mexico has a comparative advantage in ______ and the UnitedStates has a comparative advantage in ______.

Question

Quizplus · Accepted Answer

Looking at the figure, we can see that Mexico can produce 12 shirts or 6 computers with 24 units of labor, while the United States can produce 8 shirts or 12 computers with 24 units of labor. Mexico has a lower opportunity cost of producing shirts (1 computer for every 2 shirts) compared to the United States (1 computer for every ⅔ shirts), meaning Mexico has a comparative advantage in producing shirts. Similarly, the United States has a lower opportunity cost of producing computers (⅔ shirts for every computer) compared to Mexico (2 shirts for every computer), meaning the United States has a comparative advantage in producing computers. Therefore, the best choice is B: shirts for Mexico and computers for the United States.