Reference no: EM132267143
Refer to the table below to answer the following questions. The table indicates labor hours needed to produce one unit of umbrella and bushels of corn for the two countries.
Labor hours* required to make one
United Kingdom
Rest of the World
UK Rest of World
Umbrellas 1/6 1
Bushels of corn 1/2 1/3
*Hint: these are not opportunity cost numbers, these are the inverse of productivity.
a. The United Kingdom has an absolute advantage in the production of _______ . The Rest of the World has an absolute advantage in the production of _______.
b. The United Kingdom has a comparative advantage in the production of _______ . The Rest of the World has a comparative advantage in the production of _______.
c. The opportunity cost of producing a bushel of corn in the United Kingdom is _______ umbrellas and the opportunity cost of producing a bushel of corn in the Rest of the World is _______ umbrellas.
d. The opportunity cost of producing an umbrella in the United Kingdom is _______ bushels of corn and the opportunity cost of producing an umbrella in the Rest of the World is _______ bushels of corn.
e. Once trade is opened, we can anticipate that the international price of umbrellas will lie between _______ and _______.
f. Once trade is open, we can anticipate that the international price of corn will lie between _______ and _______.