Questions 9, 10 and 11 are based on the table below Labor hours needed to make o
ID: 1151855 • Letter: Q
Question
Questions 9, 10 and 11 are based on the table below Labor hours needed to make one unit of Wine (bottle) 12 10 Cloth 4 Jane Herber B_9. The opportunity cost of 1 bottle of wine for Jane is a. 1/3 cloth b. 3 cloth c. 2 cloth d. ½clth 10. Jane has an absolute advantage in - and Herber has an absolue advantage in -- a. cloth, wine b.wine, cloth c. cloth, cloth d. wine,wine 11. Jane has a comparative advantage in and Herber has a comparative advantage in -- a. cloth, wine b.wine, cloth c.wine, neither goodExplanation / Answer
9) To produce 1 bottle of wine jane needs 12 labour hours and to produce 1 yard of cloth jane needs 4 labour hours.
So in order to produce 1 bottle of wine, 3 yard of cloth is to be sacrificed.
So, the opportunity cost is 3 yard of cloth.
b) 3 cloth.
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10) A country has an absolute advantage over a good in which it requires less labour hours to produce an unit of the good.
Jane has absolute advantage in producing cloth as it requires 4 labour hours which is less than that of Herber who requires 5.
Similarly Herber has absolute advantage in producing wine.
a) cloth, wine.
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11) A country has comparative advantage over a good whose opportunity cost for producing that good is less.
Jane opportunity cost for producing wine is 3 yard of cloth and his opportunity cost for producing cloth is 1/3 bottle of wine.
Herber opportunity cost for producing wine is 2 yard of cloth and his opportunity cost for producing cloth is 1/2 bottle of wine.
Both of them has comparative advantage in producing cloth.
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