In Germany,one Worker Can Produce One Cuckoo Clock or One

question 126

Multiple Choice

In Germany,one worker can produce one cuckoo clock or one beer mug.In Taiwan,one worker can produce two cuckoo clocks or three beer mugs.Who has the comparative advantage in each good?

• A) Taiwan in both goods
• B) Taiwan in clocks and Germany in mugs
• C) Germany in clocks and Taiwan in mugs
• D) Germany in both goods
• The country with the comparative advantage is the one with the lowest opportunity cost.Germany has a comparative advantage in producing clocks (1 vs.1½),while Taiwan has the comparative advantage in producing beer mugs (²/₃ vs.1).

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Definitions:

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