Question

Can I get the answer of this question and if is hand writer plz clear hand writer thanks

4. Suppose in an hour, 10 kg of rice and 5 meter of cloth is produced in India, and 5 kg and 2 meter in Thailand. Using opportunity costs, explain which country should export cloth and which should export rice?

Answer 1

From this table, we can see that:

	India	Thailand
Rice	10	5
Cloth	5	2

India has absolute advantage in production for both goods, i.e. it produces 10 kg rice, compared to 5 in Thailand, and 5m cloth as compared to 2 in Thailand.

But, it has a comparative advantage in Cloth only, as it has to give up 10 kg rice for 5m cloth i.e. 1kg rice for 0.5m cloth, while Thailand gives up 5 kg rice for 2m cloth i.e. 1kg Rice for 0.4 m Cloth, hence Thailand gives up less cloth to produce 1kg of Rice, hence Rice can be cheaply produced in Thailand (for 0.4m of Cloth) and Cloth can be cheaply produced in India (2 kg of Rice vs 2.5 kg of Rice in Thailand)
Hence, Rice should be produced in Thailand and Cloth in India

Hope this helps.