2) Coastal realm has a comparative advantage in producing digital TVs.
Border Kingdom has a comparative advantage in producing bottles of wine.
Explanation:
1)
a. In Border Kingdom:
Opportunity cost of producing 300 bottles of wine = production of 60 TVs.
Thus opportunity cost of producing 1 bottle of wine = 60/300 = 0.2 TVs
Opportunity cost of producing 1 TV = 300/60 = 5 bottles.
b. In Coastal realm:
Opportunity cost of producing 1 bottle of wine = 50/150 = 0.33 TVs
Opportunity cost of producing 1 TV= 150/50 = 3 bottles
2)
From the above, it is seen that the opportunity cost of producing 1 wine bottle is lower for Border Kingdom and the opportunity cost of producing TV is lower for Coastal Realm, therefore, the country Border Kingdom should produce wine bottles and Coastal Realm should produce TV's.
1) a. 0.2 TVs , 5 bottles
b. 0.33 TVs , 3 bottles
2) Coastal realm has a comparative advantage in producing digital TVs.
Border Kingdom has a comparative advantage in producing bottles of wine.
Explanation:
1)
a. In Border Kingdom:
Opportunity cost of producing 300 bottles of wine = production of 60 TVs.
Thus opportunity cost of producing 1 bottle of wine = 60/300 = 0.2 TVs
Opportunity cost of producing 1 TV = 300/60 = 5 bottles.
b. In Coastal realm:
Opportunity cost of producing 1 bottle of wine = 50/150 = 0.33 TVs
Opportunity cost of producing 1 TV= 150/50 = 3 bottles
2)
From the above, it is seen that the opportunity cost of producing 1 wine bottle is lower for Border Kingdom and the opportunity cost of producing TV is lower for Coastal Realm, therefore, the country Border Kingdom should produce wine bottles and Coastal Realm should produce TV's.
Ok
Explanation: