Question

England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. Which country has the absolute advantage in each good? Which country has the comparative advantage in each good?

Answer 1

Answer:

Scottish workers have an absolute advantage in producing scones.

English workers have an absolute advantage in producing sweaters.

The opportunity cost Scottish workers have a comparative advantage in Sweaters and English workers have a comparative advantage in Scones.

Explanation:

English workers can produce 50 scones per hour which is 10 more than Scottish workers who can produce 40 scones an hour, they have an absolute advantage in producing scones.

Scottish workers can produce 2 sweaters compared with English workers who can only produce 1, they have an absolute advantage.

The opportunity cost of an English worker producing a sweater is 50 scones. This is because if they spend an hour producing a sweater, they could have been producing 50 scones.

The opportunity cost of a Scottish worker producing a sweater is 20 scones. This is because in an hour they can produce 2 sweaters or 40 scones. Therefore, for each sweater they lose 20 scones