The Following Table Shows Output Per Hour for Mexico and Canada

question 13

Essay

The following table shows output per hour for Mexico and Canada, two countries that produce beer and T-shirts:
What is the opportunity cost of a bottle of beer for Mexico? What is the opportunity cost of a T-shirt for Mexico? Who has a comparative advantage in producing beer? How can you tell?

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Definitions:

X-Inefficiency

The difference between efficient behavior of enterprises assumed or implied by economic theory and their observed behavior in practice, often due to a lack of competitive pressure.

Pure Competition

A market structure characterized by many small firms producing identical products, where no single firm has significant control over the market price.

Monopolistic Competition

A market structure characterized by many producers selling products that are similar but not identical, allowing for competition based on quality, price, and brand.

Nondiscriminating Monopolist

A monopolist that charges all consumers the same price for its product or service, regardless of the market segment.