Use the following to answer questions :
-(Table: Comparative Advantage I) Look at the table Comparative Advantage I. The opportunity cost of producing 1 box of cell phones for Finland is _____ box(es) of herring.
A)10
B)0.5
C)5
D)0.1

Question

Use the following to answer questions : 
-(Table: Comparative Advantage I) Look at the table Comparative Advantage I. The opportunity cost of producing 1 box of cell phones for Finland is _____ box(es) of herring.
A)10 
B)0.5 
C)5 
D)0.1

Quizplus · Accepted Answer

Finland's opportunity cost of producing 1 box of cell phones is 5 boxes of herring. However, the opportunity cost of producing 1 box of herring for Finland is only 2/3 of a box of cell phones, which is less than the opportunity cost for Japan (1 box of cell phones) and thus Finland has a comparative advantage in producing herring. Therefore, Finland should specialize in producing herring and trade with Japan for cell phones.

Use the Following to Answer Questions