Jubas Production Possibilities Frontier Frontier 493 10 10 1

Juba\'s Production Possibilities Frontier Frontier 493 10 10 12 3 4561 w Refer to Figure 3-18. Bintu has a comparative advantage in the production of O a. bowls and Juba has a comparative advantage in the production of cups. O b. cups and Juba has a comparative advantage in the production of bowls. O c. both goods and Juba has a comparative advantage in the production of neither good. O d. neither good and Juba has a comparative advantage in the production of both goods. lcon Key

Solution

1. A country has a comparative advantage in producing that good if the opportunity cost of producing that good is lower in that country as compared to another country.

Bintu:

8 cups = 2 bowls

1 cup = 2/8 = 1/4 = 0.25 bowls

1 bowl = 8/2 = 4 cups

Opportunity cost of producing 1 cup is 0.25 bowls and 1 bowl is 4 cups.

Juba:

6 cups = 4 bowls

1 cup = 4/6 = 0.67 bowls

1 bowl = 6/4 = 1.5 cups

Opportunity cost of producing 1 cup is 0.67 bowls and 1 bowl is 1.5 cups.

Opportunity cost of producing 1 cup is lower when it is produced by Bintu. So, Bintu has comparative advantage in the production of cups. On the other hand, Juba has comparative advantage in the production of bowls.

Therefore, answer is b) cups and Juba has comparative advantage in the production of bowls.

2. Rancher can produce 6 pork or 6 pounds of tomatoes

6 tomatoes = 6 pork

1 tomato = 6/6 = 1 pound of pork

So, opportunity cost of 1 tomato is 1 pound of pork.

Answer is a) 1 pound of pork