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comparative advantage

1. In a day of production, firms in Angola can produce 200 liters of oil or 100 kilograms of tungsten. Firms in Namibia can produce 160 liters of oil or 60 kilograms of tungsten. Which country has an comparative advantage in the production of tungsten?
a. Both countries are equally advantageous in production.
b. Neither country has an advantage in production.
c. Angola has the comparative advantage.
d. Namibia has the comparative advantage.

2. In a day production, firms in Israel can produce 77 microprocessors or 24 ballistic missiles. Firms in the United States can produce 88 microprocessors or 14 ballistic missiles. Which country has the absolute advantage in the production of ballistic missles?
a. Both countries are equally advantageous in production.
b. Neither country has an advantage in production.
c. The United States has the absolute advantage.
d. Israel has the absolute advantage.

Solution Preview

1. In a day of production, firms in Angola can produce 200 liters of oil or 100 kilograms of tungsten. Firms in Namibia can produce 160 liters of oil or 60 kilograms of tungsten. Which country has an comparative advantage in the production of tungsten?
a. Both countries are equally advantageous in production.
b. ...

Solution Summary

Comparative advantage is illustrated in this tutorial.

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