Question

Assume that germany and china can produce beer and cloth. If the mplc/mplb for germany is 2/5 and mplc/mplb for china is 1, then germany and china have a comparative advantage in:

Answer 1

Explanation:

Assume that Germany and China can produce beer and cloth. If the MPLC/MPLB for Germany is 2/5 and MPLC/MPLB for China is 1, then Germany and China have a comparative advantage.

Answer 2

Beer and Cloth respectively

Explanation:

• The comparative advantage is the term of economic which refers to the ability of the economy for producing the goods and services at the lower opportunity cost than that of the trade partners.
• It provide the company the ability to sell the goods and services at the low price than the competitors in the market and also realize a stronger sales margins by the business.
• So, in this case, Germany produces beer whereas China produces cloth and they realize mplc/mplb which is also good in their respective field, then Germany will have comparative advantage in beer and China will have comparative advantage or benefit in cloth.