Suppose that Dunkin Donuts reduces the price of its regular coffee from $2 to $1 per cup, and as a result, the quantity sold per
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Answer: The answer is as follows:
Explanation:
From these numbers, we can conclude that USA has a comparative in producing cars and France has a comparative advantage in producing bottles.
Opportunity cost shows that how many units of one good have to be foregone in order to produce one additional unit of other good.
In USA:
Opportunity cost of producing bottles =
= 0.75
Opportunity cost of producing cars =
= 1.33
In France:
Opportunity cost of producing bottles =
= 0.55
Opportunity cost of producing cars =
= 1.8
Above calculations clearly shows that USA has a lower opportunity in producing 1 unit of car as compared to the France, so it has a comparative advantage in producing cars.
Whereas, France has a lower opportunity in producing 1 unit of bottle as compared to the USA, so it has a comparative advantage in producing Bottles.
The country that should import airplanes is country A.
<h3>Which country should import airplanes?</h3>The country that should import airplanes is the country that does not have a comparative advantage in the production of airplanes. A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries.
A country has a lower opportunity cost if it forgoes less quantity of an alternative product when producing another product.
Opportunity cost of country A in the production of airplanes: 8 million / 8 = 1 million
Opportunity cost of country B in the production of airplanes: 4 million / 6 = 670,000
To learn more about comparative advantage, please check: brainly.com/question/25139916
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