Washington's Production Possibilities Table (in tons)
Product: A B C D E F
Apples: 40 32 24 16 8 0
Bananas: 0 4 8 12 16 20
Oregon's Prudction Possibilities Table (in tons)
Product: A B C D E F
Apples: 75 60 45 30 15 0
Bananas: 0 5 10 15 20 25
Based on the table above: (I got the first question but how are you finding the answers mathematically? and can you please explain why?
1. Who has the absolute advantage in apples? 75>40 so Oregon
2. Who has the absolute adv. in bananas? 75>20 ??? (NOT SURE)
3. What is Washington's opportunity cost to produce one apple?
4. What is Washington's opportunity cost to produce one banana?
5. What is Oregon's opportunity cost to produce one apple?
6. What is Oregon's opportunity cost to produce one banana?
7. Who has a comparative advantage in apples?
8. Who has a comparative advantage in bananas?
In the table, there should be 6 columns... the numbers line up but its hard because it's slightly moved here. Hope someone can help!
To find the answers to these questions mathematically, you can use the concept of comparative advantage and opportunity cost.
1. To determine who has the absolute advantage in apples, compare the production quantities. In this case, Oregon produces more apples (75 tons) compared to Washington (40 tons), so Oregon has the absolute advantage.
2. To determine who has the absolute advantage in bananas, compare the production quantities. In this case, Washington produces more bananas (20 tons) compared to Oregon (25 tons), so Washington has the absolute advantage.
3. To calculate Washington's opportunity cost to produce one apple, you need to compare the production of apples to the production of bananas. In this case, Washington gives up 1 banana to produce 8 apples (the difference between 16 bananas and 8 apples), so the opportunity cost is 1/8 (1 banana / 8 apples).
4. To calculate Washington's opportunity cost to produce one banana, you need to compare the production of bananas to the production of apples. In this case, Washington gives up 8 apples to produce 1 banana (the difference between 40 apples and 32 apples), so the opportunity cost is 8 apples / 1 banana.
5. To calculate Oregon's opportunity cost to produce one apple, you need to compare the production of apples to the production of bananas. In this case, Oregon gives up 1.33 bananas to produce 15 apples (the difference between 30 bananas and 15 apples), so the opportunity cost is 1.33 bananas / 15 apples.
6. To calculate Oregon's opportunity cost to produce one banana, you need to compare the production of bananas to the production of apples. In this case, Oregon gives up 1.88 apples to produce 1 banana (the difference between 75 apples and 60 apples), so the opportunity cost is 1.88 apples / 1 banana.
7. To determine who has a comparative advantage in apples, compare the opportunity costs. The lower opportunity cost means a comparative advantage. In this case, Washington has an opportunity cost of 1/8, while Oregon has an opportunity cost of 1.33/15. Therefore, Washington has a comparative advantage in apples.
8. To determine who has a comparative advantage in bananas, compare the opportunity costs. The lower opportunity cost means a comparative advantage. In this case, Washington has an opportunity cost of 8 apples / 1 banana, while Oregon has an opportunity cost of 1.88 apples / 1 banana. Therefore, Oregon has a comparative advantage in bananas.