In Canada, a worker can produce 20 barrels of oil or 40 tons of wood per year.In
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Question:
- In Canada, a worker can produce 20 barrels of oil or 40 tons of wood per year. In Venezuela, a worker can produce 60 barrels of oil or 30 tons of wood per year.
Country | Oil (barrels) | Wood (tons) |
Canada | 20 | 40 |
Venezuela | 60 | 20 |
- Calculate the opportunity cost of oil in terms of wood for Canada and Venezuela.
- Calculate the opportunity cost of wood in terms of oil for Canada and Venezuela.
- Which country has a comparative advantage in oil production?
- Which country has a comparative advantage in wood production?
- What product should Canada specialize in? Explain why.
- What product should Venezuela specialize in? Explain why.
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