# Economics

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I am getting thrown off by absolute advantage:

Boston:
Red Socks per worker per hour 3
White Socks per worker per hour 3

Chicago:
Red Socks per worker per hour 2
White Socks per worker per hour 1

A) Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago?

This is my answer to this question:

Boston:
3 White Socks=3 Red Socks
1 White Sock=1 Red Sock

Chicago:
1 White sock=2 Red Socks
.5 White Sock=1 Red Sock

The next question is what is what I am having trouble with:

B)Which city has an absolute advantage in the production of each color sock? Whick city has a comparative advantage it ehe productions of each color sock?

Boston has the absolute advantage in the production of white socks. Neither city has an absolute advantage in the production of red socks.

Chicago has a comparative advantage in the production of white and red socks.

I am not sure I am answering correctly.

• Economics - ,

Boston has an absolute advantage in producing both red socks and white socks. For red, a worker in Boston can produce 3 for every 2 a Chicago worker can (3>2). For white, a Boston worker can produce 3 for every 1 a Chicago worker can (3>1).

Chicago has a comparitive advantage in producing red socks only. In Chicago, the opportunity cost to produce one red is .5 white while in Boston the opportunity cost to produce 1 red is 1 white.
So, Boston has a compartitive advantage in producing white socks. In Boston, the opportunity cost to produce 1 white is 1 red. While in Chicago, the opportunity cost of producing 1 white is 2 reds.