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Suppose That in Belize, the Opportunity Cost of Producing a Sailboat

question 97

Essay

Suppose that in Belize, the opportunity cost of producing a sailboat is 5 hang gliders.In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders.
a.What is the opportunity cost of producing a hang glider for Belize?
b.What is the opportunity cost of producing a hang glider for Honduras?
c.Which country has a comparative advantage in the production of hang gliders?
d.Which country has a comparative advantage in the production of sailboats?


Definitions:

Resource Demand Curve

A graphical representation showing the relationship between the price of a resource and the quantity of the resource demanded by employers.

Marginal Product

The additional output that results from using one more unit of a specific input, holding all other inputs constant.

Product Price

The monetary value assigned to a good or service that is to be sold in the marketplace.

Economic Profit

The profit made by a firm after accounting for both its explicit (out-of-pocket) and implicit (opportunity) costs, providing a comprehensive measure of true profitability.

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