Let's solve this step by step using the data from the chart.
Given Data:
| | US | Mexico |
|----------|------|--------|
| Cars | 100 | 50 |
| Beef | 300 | 100 |
---
Step 1: Calculate Opportunity Costs
Opportunity Cost = What you give up / What you gain
#### For the
US:
- To produce
1 car, how much beef is given up?
- US can make 100 cars or 300 beef.
- So, opportunity cost of
1 car = 300/100 =
3 beef
- To produce
1 beef, how many cars are given up?
- 100 cars / 300 beef =
1/3 car per beef
So:
-
US:
- 1 Car =
3 Beef
- 1 Beef =
0.33 Cars (or 1/3)
#### For
Mexico:
- To produce
1 car, how much beef is given up?
- Mexico can make 50 cars or 100 beef.
- So, opportunity cost of
1 car = 100/50 =
2 beef
- To produce
1 beef, how many cars are given up?
- 50 cars / 100 beef =
0.5 car per beef
So:
-
Mexico:
- 1 Car =
2 Beef
- 1 Beef =
0.5 Cars
---
Now fill in the
Opportunity Cost section:
```
Opportunity Cost:
US: Mexico:
1 Car = 3 Beef 1 Car = 2 Beef
1 Beef = 0.33 Cars 1 Beef = 0.5 Cars
```
---
Now answer the questions:
####
1. Which country has the absolute advantage in Cars?
- Absolute advantage means producing
more of a good with the same resources.
- US produces
100 cars vs Mexico’s
50 cars →
US has absolute advantage in Cars
✔ Answer: US
---
####
2. Which country has the absolute advantage in Beef?
- US produces
300 beef vs Mexico’s
100 beef →
US has absolute advantage in Beef
✔ Answer: US
---
####
3. What is the US’s opportunity cost of producing Cars?
- From above:
1 car = 3 beef
✔ Answer: 3 Beef
---
####
4. What is Mexico’s opportunity cost of producing Beef?
- From above:
1 beef = 0.5 cars
✔ Answer: 0.5 Cars
---
####
5. Which country has the comparative advantage in Beef?
- Comparative advantage is determined by
lower opportunity cost.
- US: 1 beef = 0.33 cars
- Mexico: 1 beef = 0.5 cars
Since
0.33 < 0.5, the
US has a lower opportunity cost for beef.
✔ Answer: US
---
Final Answers:
Opportunity Cost:
- US:
- 1 Car =
3 Beef
- 1 Beef =
0.33 Cars
- Mexico:
- 1 Car =
2 Beef
- 1 Beef =
0.5 Cars
Questions:
1.
US
2.
US
3.
3 Beef
4.
0.5 Cars
5.
US
✔ All answers use numbers as required.
Parent Tip: Review the logic above to help your child master the concept of comparative advantage worksheet.
