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L3.3 - Comparative Advantage

1) Andy can clean 1 office in 60 minutes or 1 house in 30 minutes. Hannah can clean 1 office in 20 minutes or 1 house in 15 minutes. 2) Andy's opportunity cost of cleaning an office is 0.5 houses. Hannah's opportunity cost of cleaning an office is 0.75 houses. 3) Andy has a comparative advantage in cleaning offices and Hannah has a comparative advantage and absolute advantage in cleaning houses.

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Phung Nha
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96 views1 page

L3.3 - Comparative Advantage

1) Andy can clean 1 office in 60 minutes or 1 house in 30 minutes. Hannah can clean 1 office in 20 minutes or 1 house in 15 minutes. 2) Andy's opportunity cost of cleaning an office is 0.5 houses. Hannah's opportunity cost of cleaning an office is 0.75 houses. 3) Andy has a comparative advantage in cleaning offices and Hannah has a comparative advantage and absolute advantage in cleaning houses.

Uploaded by

Phung Nha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Part 1b: Amount of Time to Produce

Comparative Advantage Product / Service Andy Hannah

Part 1a: Amount of Goods Produced in 1 hour Cleaning 1 office 60 minutes 20 minutes
Product / Service US JAPAN
Cleaning 1 house 30 minutes 15 minutes
Cars 12 10 1. What is Andy’s opportunity cost of cleaning
office in terms of cleaning houses?
Computers 4 6

1. What is the US’s opportunity cost of making cars?

2. What is Hannah’s opportunity cost of cleaning


office in terms of cleaning houses?
2. What is Japan’s opportunity cost of making cars?

3. What is Andy’s opportunity cost of cleaning


3. What is US’s opportunity cost of making
houses in terms of cleaning office?
computers?

4. What is Hannah’s opportunity cost of cleaning


4. What is Japan’s opportunity cost of making
houses in terms of cleaning office?
computers?

5. Who has the absolute advantage in cleaning


5. Who has the absolute advantage in cars?
office?
Hannah

6. Who has the absolute advantage in computers?


6. Who has the absolute advantage in cleaning
houses?
Hannah
7. Who has the comparative advantage in cars?

7. Who has the comparative advantage in


cleaning office?
8. Who has the comparative advantage in
computers? Andy

8. Who has the comparative advantage in


cleaning houses?
9. Which country should produce which good and
why? Hannah

US: car 9. Who should clean what and why?


JP: computer Andy: office --> comparative advantage
Hannah: house --> absolute advantage and absolute
advantage

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