China has developed a comparative advantage in the production of children\'s toy
ID: 1211903 • Letter: C
Question
China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is Use the table above to select the statement that accurately interprets the data in the table. Use the table above to select the statement that accurately interprets the data in the table. Use the table above to select the statement that accurately interprets the data in the table. If the_____cost of production for two goods is different between two countries then mutually beneficial trade is possible.Explanation / Answer
50. Option D is correct.
This is because comparative advantage is derived from minimising the opportunity cost. The opportunity cost of using unskilled workers is the lowest in making toys as China has relative adundance in that.
51. Option A is correct.
O.C of picking berries by Bill is, 30 berries = 60 fish or 1 berry = 2 fish.
O.C of picking berries by Rob is, 20 berries = 80 fishes or 1 berry = 4 fish.
Thus the O.C of picking berries is greater for Rob than for Bill (4>2).
52. Option B is correct.
As we can see in the above part, the O.C for picking berries for Bill is 2 fish which is less than Rob, of 4 fish, then the O.C is less for Bill, thus Bill has the comparative advantage in picking berries.
53. Option B is correct.
O.C for Bill in catching fish is, 60 fish = 30 berries or 1 fish = 0.5 berries.
O.C for Rob in catching fish is, 80 fish = 20 berries or 1 fish = 0.25 berries.
Thus Rob has lower O.C in catching fish and therefore a comparative advantage in it.
54. Option A is correct.
If the two countries have different O.C then there can be a comparative advantage in those goods and specialization of goods is possible and thereby trade of goods.
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