Question

Bintu has a comparative advantage in the production of:______.

Answer 1

Answer:

b. cups and Juba has a comparative advantage in the production of bowls.

Explanation:

A company or country could said to have a comparative advantage if t produces a good or service with the lowest possible opportunity costs.

Bintu's opportunity cost of 1 unit of Bowls.

Bintu can produce 2 Bowls or 8 cups.

Therefore; 2 Bowls = 8 cups

We need to make it 1 Bowl, so we divide both sides by 2.

2 Bowls / 2 = 1 Bowl  

8 cups / 2 = 4 cups

 

Hence, 1 bowl = 4 cups

 

Juba's opportunity cost of 1 unit of Bowls.

Juba can produce 4 Bowls or 6 cups.

Therefore; 4 Bowls = 6 cups

We need to make it 1 Bowl, so we divide both sides by 4.

4 Bowls / 4 = 1 Bowl  

6 cups / 4 = 1.5 cups

 

Hence, 1 bowl = 1.5 cups

We now need to calculate the opportunity cost of 1 unit of cups from Bintu and Juba. This is just the same process as before, but with 1 unit of cup instead.

 

Bintus's opportunity cost of 1 unit of cups

Bintu can produce 8cups or 2 bowl.

Therefore, 8 cups = 2 bowls.  

We need to make it 1 cup, so we divide both sides by 8.

8 cups / 8 = 1 cup

2 bowls /8 = 0.25 bowls.

 

Hence, 1 cup - 0.25 bowls

Juba's opportunity cost of 1 unit of cups.

Juba can produce 6 cups or 4 bowls.

Therefore, 6 cups = 4 bowls.

We need to make it 1 cup, so we divide both sides by 6.

6 cups /6 = 1 cup

4 bowls / 6 =0.67 bowl

 

Hence, 1 cup = 0.67 bowl

Now comparative advantage is when either of these two can produce a good with the lowest possible opportunity cost.

From the calculation above, the opportunity cost for bowl is 4 in Bintu and 1.5 in Juba. So since Juba has the lowest opportunity cost for bowls, it, therefore, Juba has a comparative advantage in the production of bowls.  In the same way, since cost for Cups in Bintu is 0.25 and that of Juba is 0.67, then Bintu has a comparative advantage in the production of cups