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ew History Bookmarks People Window Help Do Homework-Favour okpor Secure 20&flushed-false&cld 50905498centerw.. ECO 2013.701 Fall 2018 Principles of Macroeconomics Favour okpor&1 9/6/18 638 PM Homework: Chapter 2 PPF HW Score: 0.5 of 1 pt 19 of 34 (18 complete) Hw Score: 51.47%, 17.5 of 34 pts Concept: Absolute and Comparative Adv1 Suppose the Unted States and Mexico both produce hamburgers and tacos. The combratonsofto two goods that each country can podce none day presented in the table below United States 90 Which country has an absolute advantsge in producing tacos? The Unted Staces Which country has a comparative advantage in producing tacos? Mexioo ourrenty producing 8 tons of hamburgens and 45 tons of each has a comparative advantage)then a total of 72 Suppose the United States i tacos. If the United Statos and Maxico each specialize in addtional tonts) of hamburgers can be produced for the two countries combined (eter a umeri reaponse usingn tacos can be produced. s currently producing 180 tons of hamburgers and 81 tons of tacos and Mexico is preducing only one good (the good for which Enter your answer in the answer box and then click Chack Arswer Clear All a Search Default 5 6 8 3 4Explanation / Answer
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We can see from the above table that if both produces only tacos then US can 243 Tacos while Mexico can Produce only 135 Tacos. As with the given resources US can Produce hence. United States has absolute advantage in producing Tacos.
In order to produce 135 tacos Mexico has to sacrifice 27 hamburgers while in order to produce 243 tacos US has to sacrifice 270 hamburgers. Hence As opportunity cost is greater for US. Hence MExico has the Comparative advantage in Producing Tacos.
Now as mexico has comparative advantage in producing Tacos, US should have a comparative advantage in producing Hamburgers. Hence US should specialize in Hamburgers and Mexico should specialized in Tacos. Hence US will produce only Hamburgers and Mexico will produce only Tacos. So If they Both specializes then Total Number of Tacos = 135 tons and Total Number of Hamburgers = 270 tons.
Suppose, US is producing 180 tons of Hamburgers and 81 Tons of Tacos and US is producing 18 tons of Hamburgers and 45 Tons of Tacos.
So Total Number of Tacos = 81 + 45 = 126 and Total Number of hamburgers = 180 + 18 =198
Hence If they specializes, then total of 270 - 198 = 72 additional tons of hamburgers can be produced and total of 135 - 126 = 9 additional tons of Tacos can be produced.
Hence If they specializes, then total of 72 additional tons of hamburgers can be produced and total of 9 additional tons of Tacos can be produced.
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