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    Opportunity costs and comparative advantage

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    Please help with the following international economics problems.

    In one day, Canada can produce either 200 tonnes of wheat or 90 tonnes of copper ingots. In one day, Chile can produce either 120 tonnes of wheat or 175 tonnes of copper ingots. Based on these numbers,

    a. Calculate Canada's opportunity cost of one tonne of wheat.

    b. Calculate Chile's opportunity cost of one tonne of copper ingots.

    c. Who has a comparative advantage in producing copper ingots? Why?

    d. How many tonnes of wheat and how many tonnes of copper ingots will be produced if each country specializes?

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    Solution Preview

    a. one tonne wheat = 90/200 tonnes copper = 9/20 tonnes copper
    b. one tonne copper = 120/175 tones wheat = 24/35 tonnes wheat
    c. ...

    Solution Summary

    The following posting helps with an international economics problem. In this solution, opportunity costs and comparative advantage are demonstrated by an example using the production of copper and wheat in Canada and Chile. Step by step calculations are given for each.