Compute the opportunity cost and absolute advantage

Reference no: EM1312884

Absolute and Comparative Advantage

You have the following information concerning the production of wheat and cloth in the United States and the United Kingdom:

Labor Hours Required to Produce One Unit

	United Kingdom	United States
Wheat	2	1
Cloth	6	5

1. What is the opportunity cost of producing a unit of wheat in the United Kingdom? In the United States?

2. Which country has an absolute advantage in producing wheat? In producing cloth?

3. Which country has a comparative advantage in producing wheat? In producing cloth?

4. Which country should specialize in producing wheat? In producing cloth?

Reference no: EM1312884

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