the following table shows the hourly per worker of a quart o

ept ul LUImpuiutitte auvantage static or does it the concept r O the Coner time? Can a country change its comparative s ase over Jantage to export certain good? anta npr column, Frank Wolak, a professor of hantage to ex conomics at St to a newspaper col t Stanford, writes that \"the United States is a omic oto be a significant global competitor in the pro- s a un green t duction green techn in human and ph this argument? Source: Frank A. Wolak,\" mes January 19, 2011, dely explain whether you agree with the following argu technologies that are not relatively intensiva ad physical capital.\" Why does the writer nk A. Wolak, \"Our Comparative Advantage New Briefly e US is better at producing most commoditie ment Guatemala. Therefore, there is no basis for internationa than Guatemala trade between the two countries. (Hint: You do not need an specific information about the economies of Guatemala the United States to be able to answer this question.) The following table shows the hourly output per work f a quart of olive oil and a pound of pasta in Gree d Italy: Output per Hour of Work Olive Oil Pasta Greece Italy 4

Solution

Formula to calculate opportunity cost is=( what is sacrificed )/.(what is gained)

Greece: opportunity cost of producing olive oil= 2(units of pasta sacrificed)/6(units of olive oil gained)=1/3 units of pasta

opportunity cost of producing pasta=6(units of olive oil sacrificed)/2(units of pasta gained)=3 units of olive oil

Italy:opportunity cost of olive oil=6(units of pasta sacrificed)/4(units of olive oil gained)=3/2 units of pasta

opportunity cost of producing pasta=4(units of olive oil sacrificed)/6(units of pasta gained)=2/3 units of olive oil