Suppose that the costs of production of winter hats and wheat in two countries are as follows:

Question:

a. What is the opportunity cost of producing one more winter hat in the United States? In Russia?
b. What is the opportunity cost of producing one more bushel of wheat in the United States? In Russia?
c. Which country has a comparative advantage in winter hats? Inwheat?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...