Question

uppose that the resource base in Country X can produce either 100 units of alpha or 300 units of beta. Similarly, suppose that Country Y's resource base is capable of producing 100 units of alpha or 200 betas. Clearly, the opportunity cost of 100 alphas is lower in (1) ________ Based on this result, it would be best for Country X to concentrate on good (2) ________

Answer 1

Answer:

y

beta

Explanation:

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

Opportunity cost of country X in producing alpha = 300 / 100 = 3 units of beta

Opportunity cost of country Y in producing alpha = 200 /100 = 2 units of beta

Y has a comparative advantage in the production of alpha

Opportunity cost of country X in producing beta = 100/ 300 = 0.3

Opportunity cost of country Y in producing beta = 100/200 = 0.5

X has a comparative advantage in the production of BETA

alpha 3 2