Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B has the comparative advantage in the production of:
A) iPods only.
B) tablets only.
C) both iPods and tablets.
D) neither iPods nor tablets.

Question

Quizplus · Accepted Answer

Country B has a comparative advantage in producing tablets because its opportunity cost of producing tablets is lower than that of Country A. In Country B, the opportunity cost of producing 1 tablet is 0.2 iPods (2 iPods/10 tablets), whereas in Country A, the opportunity cost of producing 1 tablet is 2 iPods (10 iPods/5 tablets).

Suppose That a Worker in Country a Can Make Either