The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | }
\hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \
\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \
\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \
\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \
\hline
\end{array}$$

-On the basis of these data,we can say that:
A)Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish
B)Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips
C)both Landia and Scandia have a comparative advantage in fish
D)both Landia and Scandia have a comparative advantage in chips
E)neither Landia nor Scandia has a comparative advantage in chips

Question

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } 
\hline  { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \
\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \
\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \
\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \
\hline
\end{array}$$

-On the basis of these data,we can say that:
A)Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish
B)Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips
C)both Landia and Scandia have a comparative advantage in fish
D)both Landia and Scandia have a comparative advantage in chips
E)neither Landia nor Scandia has a comparative advantage in chips

Quizplus · Accepted Answer

Comparative advantage is determined by which country can produce a good at a lower opportunity cost. Landia produces chips at a rate of 40 per worker, while Scandia produces them at 48 per worker. However, when comparing the opportunity cost of producing fish versus chips, Landia sacrifices less fish production for chips (since it produces fewer fish per worker) than Scandia does (which sacrifices more fish production due to its higher fish per worker rate). Thus, Landia has a comparative advantage in chips, and Scandia, with its higher fish production rate per worker, has a comparative advantage in fish.

The Following Data Outline Production Choices (A or B) in Two