Question

In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips. From this information, we know that:
1)Belgium has a comparative advantage in raising beef2)Belgium has an absolute advantage in raising beef3)the Netherlands has a comparative advantage in raising tulipes4)the Netherlands has a comparative advantage in raising beef

Answer 1

Answer:

The answer is : 4) The Netherlands has a comparative advantage in raising beef

Explanation:

First, it is clear to see Netherlands has an absolute advantage in raising beef ( 100 tons of beef for Netherlands in comparing to 50 tons of beef of Belgium)

For Netherlands, the opportunity cost to raising 1 ton of beef is 10 boxes of tulips; the opportunity cost to produce 1 box of tulip is 0.1 ton of beef. (1)

For Belgium, the opportunity cost to raising 1 ton of beef is 15 boxes of tulips; the opportunity cost to produce 1 box of tulip is 0.07 ton of beef. (2)

From (1) and (2) => Netherlands has comparative advantages in raising beef while Belgium has comparative advantages in producing boxes of tulips.

Thus, 4 is chosen.