Suppose the united states and mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are present in the table below.
USA Mexico
Hamburgers (in tons) Tacos (in tons) Hamburgers (in tons) Tacos (in tons)
0 216 0 120
80 144 16 80
160 72 32 40
240 0 48 0
1. Suppose USA is currently producing 160 tons of hamburgers and 72 tons of tacos, and Mexico is currently producing 32 tons of hamburgers and 40 tons of tacos. If the USA and Mexico each specilize in producing only one good (the good for which each has a comparative advantage), then a total of __ additional ton(s) can be produced for the two countries combined, and a total of _ additional ton(s) of tacos can be produced.

Supposing USA is currently producing 160 tons of hamburgers and 72 tons of tacos, and Mexico is currently producing 32 tons of hamburgers and 40 tons of tacos then:

Calculating the opportunity cost of hamburgers in the US is:

Opportunity cost= 216/240= 0.9 Tacos.

Calculating the opportunity cost of Tacos in Mexico is :

Opportunity cost= 120/48=2.5 Tacos.

Opportunity cost

Opportunity cost is the forgone benefit that would have been derived from an option not chosen.

Therefore, Mexico has a comparative advantage in Tacos and US in Hamburgers.

If the USA and Mexico each specialize in producing only one good (the good for which each has a comparative advantage, then:

Then combining the production of both countries would be:

Hamburgers= 160+32= 192 tons

Tacos= 72+40=112 tons

If the both countries produce that which they have comparative advantage, then:

Total number of hamburgers would be: 240+0= 240 tons.

Total number of Tacos= 120-0=120 tons.

Therefore, the total number of additional productions of Hamburger is:

240-192= 48 tons.

The total number of additional production of Tacos is: 120-112= 8 tons.

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