1) Sally can type 100 words per minute while David can type 200 words per minute
ID: 1151814 • Letter: 1
Question
1) Sally can type 100 words per minute while David can type 200 words per minute. Given these numbers, society would be better off if which one of the two was employed as a typist? O a) Sally b) David c) It depends Submit You currently have O submissions for this question. Only 10 submission are allowed. You can make 10 more submissions for this question. (Survey Question) 2) Please provide your rationale for your answer to the previous question Submit You currently have O submissions for this question. Only 10 submission are allowed You can make 10 more submissions for this question. 3) If Japan can produce 3 rice cakes or 6 seaweed salads in an hour, while Indonesia can produce 2 rice cakes or 5 seaweed salads in an hour, which of the following is true? O a) Japan has a comparative advantage in producing both goods. b) Japan has a comparative advantage in producing seaweed salads. c) Indonesia has a comparative advantage in producing rice cakes. d) Indonesia has a comparative advantage in producing seaweed salads. Submit You currently have O submissions for this question. Only 10 submission are allowed You can make 10 more submlsslons for this question.Explanation / Answer
1) Society would be better off if David was employed as a typist. Option b is correct.
2) David has an absolute advantage in typing as he can type more words per minute than that of Sally. So if David was employed as a typist, more words can be typed and it is beneficial for society. Here I consider same wages are paid to both.
3) Indonesia has a comparative advantage in seaweed salad production. Option d is correct.
4) The opportunity cost of Japan in rice cake is 6/3=2 seaweed salads
The opportunity cost of Japan in seaweed salads is 3/6=0.5 rice cake
The opportunity cost of Indonesia in rice cake is 5/2=2.5 seaweed salad
The opportunity cost of Indonesia in seaweed salad is 2/5=0.4 rice cake.
So the opportunity cost of rice cake is less in Japan than that of Indonesia. So Japan has a comparative advantage in rice cake production
The opportunity cost of seaweed salad is less in Indonesia than that of Japan, so Indonesia has a comparative advantage in seaweed salad production.
5) Having a comparative advantage in producing a good means one can produce the good at lower opportunity cost. Option b is correct.
6) Comparative advantage depends on the opportunity cost. Opportunity cost is what we gave up to get an item. So if one has to give up less to produce a good, it has a comparative advantage over others to produce that good.
7) A country that does not have an absolute advantage in producing any good, can benefit from trade by specializing in its comparative advantage. Option d is correct.
8) Absolute advantage denotes by productivity and comparative advantage denotes by opportunity cost. It can possible that one country is not more productive in any production than others. But it must have a lower opportunity cost in any production than that of another country. That is the country which has no absolute advantage in any production, it must have a comparative advantage in any production.
9) If Switzerland produces more watches in a year than Austria, Switzerland must have an absolute advantage in watch production. Option b is correct.
10) Absolute advantage in watches denotes Switzerland is more productive in watch production. Productivity is total production per year.
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