Unit labor requirements per one unit of good Calculate oppor

Unit labor requirements per one unit of good. Calculate opportunity cost for each good and each country. Which county has comparative advantage in producing Good X which country has comparative advantages in producing Good Y

Solution

a) Opportunity cost for x in home = 1/3

Opportunity cost for x in foreign= 4/12 = 1/3

Opportunity cost for y in home = 3

Opportunity cost for y in foreign = 12/4 = 3

b,c) Home has an absolute advantage in producing both x and . and non of the countries has a comparitive advantage as the opportunity costs are exactly alike.