Question 1

	U.S. production possibilities	France's production possibilities
Steel	100	25
Concrete	200	100

The above table shows the tons of steel and concrete that can be produced by the U.S. and France in an hour.

Use the information given in the above table to answer the following questions. Show the working to your answers.

1. Suppose the U.S has 10,000 hours for production. Determine the maximum amount of steel and concrete it can produce. (2 marks)
2. Suppose France has 5,000 hours for production. Determine the maximum amount of steel and concrete it can produce. (2 marks)
3. Define the term 'absolute advantage'. Determine which country has the absolute advantage for producing steel and concrete? (2 marks)
4. Define the term 'comparative advantage. Calculate the opportunity cost for the U.S and France to produce an additional unit of steel and concrete. (2 marks)
5. Use the results in part(d) to explain the country that has a comparative advantage to produce steel and concrete. (2 marks)