1. Absolute advantage and comparative advantage A AaB Suppose you have the following information on the...

1. Absolute advantage and comparative advantage A AaB Suppose you have the following information on the marginal product of labor in rice production and apparel production in Japan and Thailand: Marginal Product of Labor Thailand Rice (bushels per hour) Apparel (units per hour) Complete the following table by computing opportunity costs of each good in terms of units of another good for both countries: Japan Thailand Opportunity cost of rice (units of apparel per bushel) Opportunity cost of apparel (bushels of rice per unit) The information given suggests that Japan has an absolute advantage in the production of that Thailand has an absolute advantage in the production of and The information given suggests that Japan has a comparative advantage in the production of and Thailand has a comparative advantage in the production of_

Opportunity cost of rice in Japan= 12/15 = 0.8 apparels

Opportunity cost of apparel in Japan = 15/12 = 1.25

Opportunity cost of rice in Thailand = 5/10 = 0.5 apparels

Opportunity cost of apparel in Thailand = 10/5 = 2

The information given suggests that Japan has an absolute advantage in the production of rice and apparel and that Thailand has an absolute advantage in the production of nothing.

The information given suggests that Japan has a competitive advantage in the production of apparels and Thailand has a comparative advantage in the production of rice.

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