Suppose the United States and Mexico both produce hamburgers and tacos. The comb
ID: 1153443 • Letter: S
Question
Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. United States Hamburgers (in tons) Tacos (in tons) Mexico Hamburgers (in tons) Tacos (in tons) 100 Which country has an absolute advantage in producing tacos? Which country has a comparative advantage in producing tacos? Suppose the United States is currently producing 100 tons of hamburgers and 30 tons of tacos and Mexico is currently producing 10 tons of hamburgers and 25 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which Bach has a comparative advantage), then a total of additional ton(s) of hamburgers can be produced for the two countries combined (snfer a numeris response using an integer) and a total of additional ton(s) of tacos can be producedExplanation / Answer
USA is having absolute advantage in production of both goods. Since, with the available resources US can manufacture both goods greater than Mexico.
USA has an absolute advantage in production of taces.
Mexico is having comparative advantage in production of taces because it can produce Taces at a lower opportunity cost in comparision to US.
Current production
US 100 tons of hamburgers and 30 tons of taxes.
Mexico 10 tons of hamburger and 25 tons of taxes.
Total 110 tons of hamburger and 55 tons of taces.
If both countries agree to produce goods in which they have comparative advantage. Then US will produce 150 tons of hamburgers and Mexico will produce 75 tons of taces.
Total 150 tons of hamburger and 75 tons of taces.
Additional unit of hamburger = 150 - 110 = 40 tons of hamburger
Additional unit of taces = 75-55 = 20 tons of taces.
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