Question

Suppose that in Mexico, it takes three labor hours to produce one shirt and 15 labor hours to produce one computer. Suppose that in the United States, it takes two labor hours to produce one shirt and 4.5 labor hours to produce one computer. Which country has the comparative advantage in the production of computers, and why?

Answer 1

Answer:

Mexico

Mexico has a comparative advantage in producing computers because it has a lower opportunity cost when compared with US

Explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.

The opportunity cost of Mexico producing computers = 3/15 = 0.2

The opportunity cost of the US producing computers = 2 / 4.5 = 0.44

Therefore, Mexico has a lower opportunity cost when compared with US.

I hope my answer helps you.