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Basic Question 7 of 15
Refer to the table below. A comparative advantage in the production of nickel is held by ______.
B. Botswana
C. neither country
A. Zimbabwe
B. Botswana
C. neither country
User Contributed Comments 15
| User | Comment |
|---|---|
| lna1717 | but Botswana produces 300 vs 0 and Zimbabwe 90 vs 0? |
| cfal1de | lna1717: it's the comparative advantage that matters, not absolute advantage. |
| cbb1 | For comparative advantage, need to look at ratios when both are producing. |
| theBooty | think about slope of the line |
| Done | Divide the production of nickel over gold. You will see the trend. This is about units of production....I think? |
| guna | Add up (0+60+120+180) = Botswana Gold = 360 (300+200+100+0) = Botswana Nickel = 600 opportunity cost = 360/600 =0.6 (0+18+36+54) = Zimbabwe Gold = 108 (90+60+30+0) = Zimbabwe Nickel = 180 opportunity cost = 108/180 =0.6 Same opportunity cost, No Comparative advantage. |
| Shelton | y_1=(-5/3)x_1 + 300, y_2=(-5/3)x_2+90 => same opp cost = 5/3 same opp cost of producing 5/3 units of Nickel per unit of Gold |
| Bibhu | There is another short cut to answer the question. Just get slope of the line i.e. (y2-y1)/(x2-x1) e.g.200-300/60-0=-100/60=-5/3 for Botswana. For Zimbabwe its 60-90/18-0=-5/3. So there is no comparative advantage. If they had asked for comparative advantage of gold y should be replaced by gold values. |
| ljamieson | faster: 300/180 = 5/3 = 90/54 |
| Smiley225 | good question! |
| Yrazzaq88 | I did it this way: 90+60+30 = 180 90/180= .5 300+200+100=600 300/600 = .5 both are the same, as per the highest output that they can produce. |
| chesschh | opportunity cost has to be involved. 0 gold would not apply |
| choas69 | wtf ? 200/60=0.33 60/18=0.33 |
| kseeba17 | Not sure why some people seem to make everything so darn complicated, just use your common sense guys. Zim can produce 90 nickel or 54 silver ... 90/54 = 1.66Nickel per silver Bowstwana can produce 300 nickel or 180 silver ... 300/180 = 1.66 Nickel per silver AKA the same. |
| maryprz14 | 300/180 = 90/54 |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe the benefits and costs of international trade
CFA® 2024 Level I Curriculum, Volume 1, Module 6.