ECON 104 HOMEWORK #2

ECON 104HOMEWORK #2

Instructions: Please show all work or points will be taken off. Good luck!

1.  (25 points) Suppose South Korea can produce 100 computer chips with 10 hours of labor input and 50 bed linens with 6 hours of labor input.  The US can produce 100 computer chips with 8 hours of labor input and 50 bed linens with 4 hours of labor input.

a) What is the opportunity cost of producing 100 computer chips for South Korea?

b) What is the opportunity cost of producing 50 bed linens for South Korea? 

c) What is the opportunity cost of producing 100 computer chips for the US? 

d) What is the opportunity cost of producing 50 bed linens for the US?

e) Using comparative advantage, which country should import bed linens?

Why?