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Question - Consider the following table for the neighboring nations of Northeast and West Coast. The table lists maximum feasible hourly rates of production of pastries if no sandwiches are produced and maximum feasible hourly rates of production of sandwiches if no pastries are produced. Assume that the opportunity costs of producing these goods are constant in both nations.
Product
Northeast
West Coast
Pastries (per hour)
50,000
100,000
Sandwiches (per hour)
25,000
200,000
Required -
a. What is the opportunity cost of producing pastries in Northeast?
b. What is the opportunity cost of producing pastries in West Coast? Of producing sandwiches in West Coast?
c. Which nation has a comparative advantage in producing pastries? Which nation has a comparative advantage in producing sandwiches?
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