Question

Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:

Answer 1

Answer: The answer is as follows:

Explanation:

From these numbers we calculated the opportunity cost of producing a good.

Canada:

For producing one gallon of maple syrup then we have to foregone 10 hockey sticks.

On the other hand, for producing one hockey stick then we have to foregone 0.10 gallon of maple syrup.

Germany:

For producing one gallon of maple syrup then we have to foregone 9 hockey sticks.

On the other hand, for producing one hockey stick then we have to foregone 0.11 gallon of maple syrup.

A country has a comparative advantage in producing a commodity if the opportunity of producing that commodity in terms of other commodity is lower in that country as compared to the other country.

A country is exporting a commodity in which it has a comparative advantage.

Canada has a comparative advantage in producing hockey sticks because the opportunity cost of producing hockey sticks in terms of maple syrup is lower than the Germany. So, Canada is exporting hockey sticks.

Whereas Germany has a comparative advantage in producing maple syrup because the opportunity cost of producing maple syrup in terms of hockey sticks is lower than the Canada. So, Germany is exporting maple syrup.