Japan's Comparative Advantage in Radio Production

What is the opportunity cost of producing 80 additional radios in Japan and Malaysia?

a. 16 coolers

b. 20 coolers

Answer:

The opportunity cost of producing 80 additional radios in Japan is 16 coolers, while the opportunity cost in Malaysia is 20 coolers.

When it comes to understanding comparative advantage in production, it is essential to consider the opportunity cost of producing goods. In this case, we are comparing Japan and Malaysia in the production of radios.

To calculate the opportunity cost of producing 80 additional radios in Japan and Malaysia, we need to look at the labor hours required to produce one radio and one cooler in each country. In Japan, it takes 5 labor hours to produce one radio and 4 labor hours to produce one cooler. This means that the opportunity cost of producing 80 additional radios in Japan is 80/5 = 16 coolers.

On the other hand, in Malaysia, it takes 4 labor hours to produce one radio and 3 labor hours to produce one cooler. Therefore, the opportunity cost of producing 80 additional radios in Malaysia is 80/4 = 20 coolers. This comparison shows that Japan has a lower opportunity cost in producing radios compared to Malaysia.

Having a lower opportunity cost indicates that Japan has a comparative advantage in the production of radios. This means that Japan can produce radios more efficiently and at a lower cost than Malaysia, making it beneficial for Japan to focus on radio production to maximize overall production efficiency.