Question

In the table below calculate opportunity cost for: Country Computers Sewing Machines Japan   500 900 Canada...

In the table below calculate opportunity cost for:

Country Computers Sewing Machines
Japan   500 900
Canada 300 480

a. Japan of producing a computer rather than a sewing machine

b. Canada of producing a computer rather than a sewing machine

c. Japan of producing a sewing machine rather than a computer

d. Canada of producing a sewing machine rather than a computer

e. Which country has comparative advantage in producing sewing machines?

f. Which country has comparative advantage in producing computers?
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Answer #1

a. Opportunity cost of Japan of producing a computer = Sewing machines given up/Computers produced = 900/500 = 1.8 sewing machines

b. Opportunity cost of Canada of producing a computer = Sewing machines given up/Computers produced = 480/300 = 1.6 sewing machines

c. Opportunity cost of Japan of producing a sewing machine = Computers given up/sewing machine produced = 500/900 = 0.56 computer

d. Opportunity cost of Canada of producing a sewing machine = Computers given up/sewing machine produced = 300/480 = 0.625 computer

e. Japan has a comparative advantage in producing sewing machines because of lower opportunity cost of producing a sewing machine than Canada.

f. Canada has a comparative advantage in producing computers because of lower opportunity cost of producing a computer than Japan.

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