The two country (Vietnam and Thailand ) produces two product Paddy and

Wheat. The given table shows the production possibility of two goods of two
countries.

Country Paddy (in tons) Wheat (in tons)

Vietnam 10 2W 20 0.5P
Thailand 25 3W 75 0.33P

a) Calculate the opportunity cost in Vietnam for Paddy ?

b) Who has comparative advantage in Wheat ?
c) If these countries were specialized trade who would produce which goods
?
a) Opportunity cost in Vietnam for Paddy
20 Wheat/10 Paddy = 2 Wheat/Paddy

b) Who has comparative advantage in Wheat ?

Opportunity cost in Vietnam for Wheat

10 Paddy/20 Wheat = 0.5 Paddy/Wheat

Opportunity cost in Thailand for Paddy

75 Wheat/25 Paddy = 3 Wheat/Paddy

Opportunity cost in Thailand for Wheat

25 Paddy/75Wheat = 0.33 Paddy/Wheat

Thailand has comparative advantage in Wheat

c) Vietnam has comparative advantage on producing Paddy and Thailand

has comparative advantage in producing Wheat.