Question

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef in Brazil? What is the opportunity cost of producing one pound of beef in the United States?

Short answer

Brazil has the absolute advantage in beef production, while the United States has the absolute advantage in autos production. The opportunity cost of producing one pound of beef in Brazil is \(\frac{1}{10}\) of an auto, and the opportunity cost of producing one pound of beef in the United States is \(\frac{3}{4}\) of an auto.

Step-by-step solution

Determine the absolute advantage in beef production

First, let's compare Brazil's and United States' production of beef to determine which country has the absolute advantage. Brazil can produce 100 pounds of beef, while the United States can produce 40 pounds. Since Brazil can produce more beef, it has the absolute advantage in beef production.

Determine the absolute advantage in autos production

Next, let's compare both countries' ability to produce autos. Brazil can produce 10 autos, while the United States can produce 30 autos. Since the United States can produce more autos, it has the absolute advantage in autos production.

Calculate the opportunity cost of producing one pound of beef in Brazil

To calculate the opportunity cost of producing one pound of beef in Brazil, we need to find out how much of the alternative good (autos) must be given up to produce one more pound of beef. Brazil can produce 100 pounds of beef or 10 autos. The opportunity cost of producing one pound of beef in Brazil is the number of autos that could be produced instead. To find this, we can divide the total amount of autos Brazil could produce by the total amount of beef they could produce: \( \frac{10 \text{ autos}}{100 \text{ pounds of beef}} = \frac{1 \text{ auto}}{10 \text{ pounds of beef}} \) Thus, the opportunity cost of producing one pound of beef in Brazil is \(\frac{1}{10}\) of an auto.

Calculate the opportunity cost of producing one pound of beef in the United States

Similarly, to calculate the opportunity cost of producing one pound of beef in the United States, we need to find out how much of the alternative good (autos) must be given up to produce one more pound of beef. The United States can produce 40 pounds of beef or 30 autos. The opportunity cost of producing one pound of beef in the United States is the number of autos that could be produced instead. To find this, we can divide the total amount of autos that the United States could produce by the total amount of beef they could produce: \( \frac{30 \text{ autos}}{40 \text{ pounds of beef}} = \frac{3 \text{ autos}}{4 \text{ pounds of beef}} \) Thus, the opportunity cost of producing one pound of beef in the United States is \(\frac{3}{4}\) of an auto.