Economics 4.1

Absolute Advantage

Being able to produce more of a good than another country.

Comparative advantage

If a country can produce a good at a lower opportunity cost than another it has a comparative advantage.

Which country has an absolute advantage in both goods

Germany has an absolute advantage in both goods.

What is the opportunity cost of producing 500 million frankfurters for Germany.

400 million frankfurters

What is the opportunity cost of making one frankfurter.

0.8 cashmere

What is the opportunity cost for uzbekistan for making one frankfurter.

10 cashmere

If a country can produce a good at a lower opportunity cost, what kind of advantage do they have?

Comparative advantage

In comparisoin to uzbekistan how is germany more advantageous

It has absolute advantage and comparative advantage in frnakfurters. .

Who has the comparative advantage in producing cashmere

The opportunity cost for Germany producing one unit of cashmere is 1.25 units of frankfurters.

The opportunity cost for Uzbekistan producing one unit of cashmere is 0.1 units of frankfurters. As uzbekistan has a low opportunity cost they have a comparative advantage in producing Cashmeres.

What does it mean for one country if the other country has a comparative advantage of producing a good.

This means that the country has a comparative advantage in porducing the other good.