The above table illustrates the unit labor requirements in hours for cars and hats for Laos...

  

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The above table illustrates the unit labor requirements in hours for cars and hats for Laos and France. Assume, as we did in class, that only labor matters in production, and that only demand drives opportunity costs which drive relative prices. Also assume that all revenues are paid out as wages. 1. Does Laos have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points) 2. Where does Laos have comparative advantage? (2 points) 3. Does France have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points) 4. Where does France have comparative advantage? (2 points) 5. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for Laos? (3 points) 6. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for France? (3 points) Laos France Cars-unit labor hours 9 1 Hats-unit labor hours 3 2 The above table illustrates the unit labor requirements in hours for cars and hats for Laos and France. Assume, as we did in class, that only labor matters in production, and that only demand drives opportunity costs which drive relative prices. Also assume that all revenues are paid out as wages. 1. Does Laos have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points) 2. Where does Laos have comparative advantage? (2 points) 3. Does France have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points) 4. Where does France have comparative advantage? (2 points) 5. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for Laos? (3 points) 6. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for France? (3 points) Laos France Cars-unit labor hours 9 1 Hats-unit labor hours 3 2

Answer rating: 100% (QA)

1Yes Laos has an absolute advantage in production It has an absolute advantage in the production of hats requiring 9 hours of labor to produce one hat ... View the full answer