To determine which conclusion is most supported by the given data, let's go through what we know step by step.
1. What is opportunity cost?
The opportunity cost of producing one good is the amount of another good that must be given up to produce an additional unit of the first good.
2. Calculate the opportunity costs for Country A:
- Opportunity cost of 1 ship in terms of planes for Country A: \( \frac{\text{Planes}}{\text{Ships}} = \frac{50}{100} = 0.5 \)
- Opportunity cost of 1 plane in terms of ships for Country A: \( \frac{\text{Ships}}{\text{Planes}} = \frac{100}{50} = 2 \)
3. Calculate the opportunity costs for Country B:
- Opportunity cost of 1 ship in terms of planes for Country B: \( \frac{\text{Planes}}{\text{Ships}} = \frac{20}{60} \approx 0.333 \)
- Opportunity cost of 1 plane in terms of ships for Country B: \( \frac{\text{Ships}}{\text{Planes}} = \frac{60}{20} = 3 \)
4. Analysis of Comparative Advantage:
- Comparative advantage in producing ships exists if one country has a lower opportunity cost for producing ships than the other:
Country A’s opportunity cost of producing one ship is 0.5 planes.
Country B’s opportunity cost of producing one ship is 0.333 planes.
Since 0.333 (Country B) < 0.5 (Country A), Country B has a lower opportunity cost in producing ships.
- Comparative advantage in producing planes exists if one country has a lower opportunity cost for producing planes than the other:
Country A’s opportunity cost of producing one plane is 2 ships.
Country B’s opportunity cost of producing one plane is 3 ships.
Since 2 (Country A) < 3 (Country B), Country A has a lower opportunity cost in producing planes.
5. Absolute Advantage:
- Absolute advantage refers to the ability of a country to produce more of a good with the same amount of resources compared to another country.
Country A can produce 100 ships per day, while Country B can produce only 60 ships per day. Therefore, Country A has an absolute advantage in producing ships.
Country A can produce 50 planes per day, while Country B can produce only 20 planes per day. Therefore, Country A has an absolute advantage in producing planes.
Given this analysis, the most supported conclusion is:
D. Country A has a comparative advantage producing planes.
