Absolute and Comparative Advantage

Self-Check Questions

1. True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
2. Brazil can produce 100 pounds of beef or 10 autos; in contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef in Brazil? What is the opportunity cost of producing one pound of beef in the United States?
3. In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in the production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?