Answer the question(s)below based on the information in the following table
Country
$$\begin{array} { | c | c | c | }
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.For trade to occur along the lines of comparative advantage,wages in A relative to wages in B (measured in the same currency)
A)must be at least twice but less than 3 times as great.
B)must be less than three times as small.
C)must be greater than $2 but less than $3.
D)Need more information to answer.

Question

Answer the question(s)below based on the information in the following table
Country
 $$\begin{array} { | c | c | c | } 
\hline \text { Goods } & \mathrm { A } & \mathrm { B } \
\hline \mathrm { X } & 3 & 9 \
\hline \mathrm { Y } & 4 & 2 \
\hline
\end{array}$$ (numbers indicate hours of labor per unit of output)
-Refer to the table above.For trade to occur along the lines of comparative advantage,wages in A relative to wages in B (measured in the same currency)
A)must be at least twice but less than 3 times as great.
B)must be less than three times as small.
C)must be greater than $2 but less than $3.
D)Need more information to answer.

Quizplus · Accepted Answer

To determine comparative advantage, we need to look at the opportunity cost of producing each good in terms of labor hours. For Country A, the opportunity cost of producing one unit of X is 3/9 = 1/3 units of Y. For Country B, the opportunity cost of producing one unit of X is 9/3 = 3 units of Y. Country A has a comparative advantage in producing good X because its opportunity cost is lower. To specialize in producing good X, Country A should only produce good X if it can obtain more than 1/3 units of Y for every hour of labor it gives up to produce one unit of X. Therefore, wages in A relative to wages in B must be at least twice but less than 3 times as great for trade to occur based on comparative advantage.

Answer the Question(s)below Based on the Information in the Following