Answer to Question #74073 in Macroeconomics for Nomsa

Question

Zambia and Malawi are able to produce maize and fish using equivalent resources as shown below:
Zambia Malawi
Maize Fish maize Fish
10 0 50 0
8 2 40 5
6 4 30 10
4 6 20 15
2 8 10 20
0 10 0 25

a. Which country has an absolute advantage in the production of maize?
b. Which country has an absolute advantage in the production of fish?
c. Which country has a comparative advantage in the production of maize?
d. Which country has a comparative advantage in the production of fish?
e. Explain the reason for International trade based on comparative advantage.

Answer 1

a) Malawi has an absolute advantage in the production of maize
b) Malawi has an absolute advantage in the production of fish
с) Malawi has a comparative advantage in the production of maize
d) Zambia has a comparative advantage in the production of fish
e) there is the reason for international trade because it is cheaper to produce maize in Malawi than in Zambia and cheaper to produce fish in Zambia than in Malawi