COMPARATIVE ADVANTAGE Homework
Directions: For each constant cost problem below, answer the following questions after creating a cost ratio
table:
1. Does Output vary or does Input vary in this problem?
2. Who has the absolute advantage for each product?
3. Who has a comparative advantage for the first product?
4. Who has a comparative advantage for the second product?
5. What would be the terms of trade?
1. Joy gives 2 haircuts or one perm in an hour. Susie gives 3 haircuts or 2 perms in an hour.
2. George fixes 16 flats or 8 brakes per day. Amy fixes 14 flats or 8 brakes per day.
3. Ana takes 30 minutes to wash the dishes and 60 minutes to vacuum the house. Her husband,
Joe, takes 15 minutes to wash the dishes and 45 minutes to vacuum the house.
4. Texans require 10 labor hours per unit of beef produced and 30 labor hours per unit of cotton
produced. Virginians require 15 labor hours per unit of beef and 40 hours per unit of cotton.
5. Spaniards can produce 10 gallons of wine or 8 gallons of olive oil per worker hour. Americans can
produce 9 gallons of wine or 3 gallons on olive oil per worker hour.
6. It takes Canadians 6 hours to produce one unit of calculators and 4 hours to produce one unit of
backpacks. It takes the Japanese 2 hours to produce the calculators and 3 hours to produce the
backpacks.
7. Americans produce 50 computers or 50 TVs per million hours of labor. Chinese produce 30
computers or 40 TVs per million hours of labor.
8. Refinery EM can produce 22 gallons of gasoline or 18 gallons of flight fuel per barrel of crude oil.
Refinery CG can produce 18 gallons of gasoline or 16 gallons of flight fuel per barrel of crude oil.
COMPARATIVE ADVANTAGE Homework
Directions: For each constant cost problem below, answer the following questions after creating a cost ratio
table:
1. Does Output vary or does Input vary in this problem?
2. Who has the absolute advantage for each product?
3. Who has a comparative advantage for the first product?
4. Who has a comparative advantage for the second product?
5. What would be the terms of trade?
1. Joy gives 2 haircuts or one perm in an hour. Susie gives 3 haircuts or 2 perms in an hour.
2. George fixes 16 flats or 8 brakes per day. Amy fixes 14 flats or 8 brakes per day.
3. Ana takes 30 minutes to wash the dishes and 60 minutes to vacuum the house. Her husband,
Joe, takes 15 minutes to wash the dishes and 45 minutes to vacuum the house.
4. Texans require 10 labor hours per unit of beef produced and 30 labor hours per unit of cotton
produced. Virginians require 15 labor hours per unit of beef and 40 hours per unit of cotton.
5. Spaniards can produce 10 gallons of wine or 8 gallons of olive oil per worker hour. Americans can
produce 9 gallons of wine or 3 gallons on olive oil per worker hour.
6. It takes Canadians 6 hours to produce one unit of calculators and 4 hours to produce one unit of
backpacks. It takes the Japanese 2 hours to produce the calculators and 3 hours to produce the
backpacks.
7. Americans produce 50 computers or 50 TVs per million hours of labor. Chinese produce 30
computers or 40 TVs per million hours of labor.
8. Refinery EM can produce 22 gallons of gasoline or 18 gallons of flight fuel per barrel of crude oil.
Refinery CG can produce 18 gallons of gasoline or 16 gallons of flight fuel per barrel of crude oil.
