1. In Canada, a worker can produce 20 barrels of oil or 40 tons of wood per year. In Venezuela, a worker can produce 60 barrels of oil or 30 tons of wood per year.

Country	Oil (barrels)	Wood (tons)
Canada	20	40
Venezuela	60	20

1. Calculate the opportunity cost of oil in terms of wood for Canada and Venezuela.

2. Calculate the opportunity cost of wood in terms of oil for Canada and Venezuela.

3. Which country has a comparative advantage in oil production?

4. Which country has a comparative advantage in wood production?
5. What product should Canada specialize in? Explain why.

6. What product should Venezuela specialize in? Explain why.

Answer rating: 100% (QA)

Opportunity Costs Opportunity Cost of Oil in terms of wood Canada To produce 1 barrel of oil a Canad... View the full answer