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    Absolute and Comparative Advantage

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    Use the following table for the given exercises

    Amount of Beef or computers produced by one worker in a day
    Canada Japan
    Beef 6 5
    Computers 2 4

    1. Which country has the absolute advantage in beef production?
    2. Which country has the absolute advantage in computer production?
    3. Which country has the comparative advantage in beef production?
    4. Which country has the comparative advantage in computer production?
    5. What are the limits of terms of trade? Specifically, when is Canada willing to trade with Japan, and when is Japan willing to trade with Canada?

    © BrainMass Inc. brainmass.com October 10, 2019, 2:43 am ad1c9bdddf
    https://brainmass.com/economics/comparative-advantage/absolute-and-comparative-advantage-390754

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    1) Beef production of Canada by one worker in a day=6
    Beef production of Japan by one worker in a day=5
    Since a worker can produce more of beef in Canada, We can say that Canada has absolute advantage in beef production.

    2) Computer production of Canada by one worker in a day=2
    Computer production of Japan by one worker in a day=4
    Since a worker can produce more of computers in Japan, We can say that Japan has absolute advantage in computer production.

    3) Opportunity cost of beef in Canada=2/6=0.33 ...

    Solution Summary

    Solution analyzes the given scenario in the light of concepts of absolute and comparative advantage.

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