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Brazil can produce 100pounds of beef or 10autos. In contrast, the United States can produce 40pounds of beef or 30autos. 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?

Short Answer

Expert verified

Brazil has the absolute advantage in beef. The United States has the absolute advantage in producing autos. The opportunity cost of producing one pound of beef in Brazil is 110. The opportunity cost of producing one pound of beef in the United States is34.

Step by step solution

01

Step 1. Meaning of Absolute Advantage.

Absolute advantage is when one country can use fewer resources to produce a good compared to another country.

02

Step 2. Meaning of Opportunity Cost.

The forgone benefit that would have been derived from an option not chosen is the opportunity cost.

03

Step 3. The absolute advantage in beef

Brazil has the absolute advantage in beef as it can produce 100pounds of beef as compared to40pounds of beef.

04

Step 4. The absolute advantage in producing autos.

The United States has the absolute advantage in producing autos as it can produce30autos as compared to10autos.

05

Step 5. The opportunity cost of producing one pound of beef in Brazil.

The opportunity cost of producing one pound of beef in Brazil is sacrificing the production of 110of autos.

100beefs=10autos1beef=10100=110autos

06

Step 6. The opportunity cost of producing one pound of beef in the United States.

The opportunity cost of producing one pound of beef in the United States is sacrificing the production of 34of autos.

40beefs=30autos1beef=3040=34autos

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