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Specialisation and trade

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Question 9

The table below shows the maximum output of Microchips or Solar Panels that countries Alpha and Beta can produce with a fixed quantity of resources.

CountryMicrochips (maximum units)Solar Panels (maximum units)Alpha8040Beta6015 \begin{array}{|c|c|c|} \hline \text{Country} & \text{Microchips (maximum units)} & \text{Solar Panels (maximum units)} \\ \hline \text{Alpha} & 80 & 40 \\ \hline \text{Beta} & 60 & 15 \\ \hline \end{array} CountryAlphaBeta​Microchips (maximum units)8060​Solar Panels (maximum units)4015​​

According to the theory of comparative advantage, which of the following statements is correct?

A

Beta should specialise in Solar Panels and Alpha should specialise in Microchips.

B

A mutually beneficial terms of trade would be 111 unit of Solar Panels for 333 units of Microchips.

C

Alpha has a comparative advantage in both goods because it has a higher maximum output for both.

D

The opportunity cost of producing 111 unit of Microchips in Beta is 444 units of Solar Panels.

Markscheme

Specialisation and trade Questions

  1. A Level
  2. /Economics
  3. /Specialisation and trade

35 exam-style questions on OCR A Level Economics Specialisation and trade. Each one has a worked solution and a mark scheme showing where the marks go.

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