What is the opportunity cost of Japan producing a car?
If half the workers in each nation produce cars and half grain, Japan produces 50 million workers x 4 cars/worker = 200 million cars and 50 million workers x 5 tons of grain/worker = 250 million tons of grain.
|Opportunity Cost of|
|US||2.5 tons of grain||0.4 cars|
|Japan||1.25 tons of grain||0.8 cars|
Which country has a comparative advantage in producing cars?
Japan has a comparative advantage in producing cars, because it has a lower opportunity cost in terms of grain given up.
What is the cost in trucks of producing one car in Japan?
Yet, Japan has an opportunity cost advantage in the production of cars. This is because it only has to give up 0.1 of a truck to produce a car.
Which country has an absolute advantage in the production of cars?
The United States has the absolute advantage in the production of both cars and wine. It can produce more of both goods.
What is Japan’s comparative advantage?
Since Japan’s opportunity cost is lower, Japan has comparative advantage on fish production and will export fish. The comparative advantage of cloth is found the same way.
Why does Japan have a comparative advantage in cars?
Japan has a comparative advantage in producing cars, since it has a lower opportunity cost in terms of grain given up. The United States has a comparative advantage in producing grain, since it has a lower opportunity cost in terms of cars given up.
What is China’s comparative advantage?
The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. This theory motivates a simple empirical prediction: within a product, China’s export unit values should be increasing in distance.
How do you determine opportunity cost?
The formula for calculating an opportunity cost is simply the difference between the expected returns of each option. Say that you have option A—to invest in the stock market hoping to generate capital gain returns.
Which country has the absolute advantage in beef?
Brazil has the absolute advantage in producing beef and the United States has the absolute advantage in autos. The opportunity cost of producing one pound of beef is 1/10 of an auto; in the United States it is 3/4 of an auto.
What is competitive advantage in economics?
What Is a Competitive Advantage? Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.
Who has comparative advantage?
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something. In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it!
Is comparative advantage better than absolute?
Absolute advantage refers to the ability to produce more or better goods and services than somebody else. Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality.
Does Japan have an absolute advantage in cars?
Since Japan is more efficient in the production of cars and the United States is more efficient in the production of food, Japan has an absolute advantage in the production of cars and the United States has an ab- solute advantage in the production of food. … To produce this car Japan needs six units of labor.
Does Japan have a comparative advantage in cars?
Thanks to its prowess in engineering and factory management, Japan has acquired a strong comparative advantage in the auto sector. Imports from Japan ensure a highly competitive US market, to the advantage of US households.
What is France comparative advantage?
This means that France can produce wine at a lower opportunity cost than the United States. In other words, France has a comparative advantage in wine production. This also means that if the United States has a comparative advantage in one of the two goods, France must have the comparative advantage in the other good.