SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE Poland requires 4 hours of labor to
ID: 1252783 • Letter: S
Question
SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGEPoland requires 4 hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels of wheat. The Czech Republic requires 6 hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels of wheat.
26. (Scenario: Absolute and Comparative Advantage) Which country has an absolute advantage in the production of wheat?
A) Poland
B) the Czech Republic
C) neither country
D) both countries
27. (Scenario: Absolute and Comparative Advantage) Which country has an absolute advantage in the production of coal?
A) Poland
B) the Czech Republic
C) neither country
D) both countries
28. (Scenario: Absolute and Comparative Advantage) Which country has a comparative advantage in the production of coal?
A) Poland
B) the Czech Republic
C) neither country
D) both countries
29. (Scenario: Absolute and Comparative Advantage) Which country has a comparative advantage in the production of wheat?
A) Poland
B) the Czech Republic
C) neither country
D) both countries
30. (Scenario: Absolute and Comparative Advantage) What is the opportunity cost of coal in Poland?
A) 1/4 hour of labor/ton of coal
B) 2 1/2 bushels of wheat/ton of coal
C) 4 hours of labor/ton of coal
D) 4/10 bushels of wheat/ton of coal
Scenario: Absolute and Comparative Advantage) In Poland, what is the marginal product of labor in coal production?
A) 2.5 tons per hour
B) 0.4 tons per hour
C) 4 tons per hour
D) 0.4 tons per bushel of wheat
Explanation / Answer
26) C (neither) 27) A ( Poland) [Since poland needs jst 4 hours to produce 1 ton of coal] 28) A ( Poland) How? If i reduce 1 unit from coal, thn i can produce 4 bushels of wheat in poland, whereas 6 bushels of wheat in Czech. So my opportunity cost of coal is lower in poland. so poland has a comparative advantage 29) B (Czech republic) With same logic as above. 30) C (4 hours of labor which is equivalent to 4 bushels of wheat) 31) A ( It should be actually .25 ton in 1 hour, as one ton is produced in 4 hours) :)
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