Cell Phone 10 hours 15 hours Lumber (board feet) 4 hours 10 hours Senegal Canada
ID: 1137144 • Letter: C
Question
Cell Phone 10 hours 15 hours Lumber (board feet) 4 hours 10 hours Senegal Canada l) This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Senegal and Canada. a. Which country has an absolute advantage in the production of cell phones? b. Which country has an absolute advantage in the production of lumber? c. What is Senegal's opportunity cost of producing one cell phone? d. What is Canada's opportunity cost of producing one cell phone? e. What is Senegal's opportunity cost of producing one board of lumber? f. What is Canada's opportunity cost of producing one board foot of lumber? f. If each country specializes in the production of the product in which it has a comparative advantage, who should produce cell phones? g. If each country specializes in the production of the product in which it has a comparative advantage, who should produce lumber.Explanation / Answer
Answer:
Answer 1 . a : Canada has an absolute advantage in the production of the cell phone because absolute advantage generate specialisation and less utilisation of resources as compare to other country i.e Senegal.
b : Canada has an absolute advantage in the production of the lumber because absolute advantage generate specialisation and less utilisation of resources as compare to other country i.e Senegal.
c : Senegal Oppournity cost of producing one cell phone = Total labour hours required for production of one cell phone/ Total labour hour required for production of one lumber
Senegal oppournity cost of producing one cell pone = 15/10=1.5
d : Canada Oppournity cost of producing one cell phone = Total labour hours required for production of one cell phone/ Total labour hour required for production of one lumber
Canada oppournity cost of producing one cell phone = 10/4=2.5
e: Senegal Oppournity cost of producing one Lumber = Total labour hours required for production of one Lumber/ Total labour hour required for production of one cell phone
Senegal oppournity cost of producing = 0.66
f: Canada Oppournity cost of producing one Lumber = Total labour hours required for production of one Lumber/ Total labour hour required for production of one cell phone
Canada oppournity cost of producing 0.4
g : When there is comparative advantage it means specialisation the person has been gained such as the oppournity cost of producing senegal is less than canada as solved above which shows that senegal has comparative advantage in producing cell phones in the market.Senegal oppournity cost is 1.5 lumber where as canada oppournity cost is 2.5 lumber.
h : When there is comparative advantage it means specialisation the person has been gained such as the oppournity cost of producing Canada is less than senegal as solved above which shows that canada has comparative advantage in producing lumber in the market.Canada has oppournity cost is 0.4 cell phone where as senegal has oppournity cost is 0.66 cell phone.
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