Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 18 - International Trade and Public Policy - Exercises - 18.1 Benefits from Specialization and Trade - Page 426: 1.1

Answer

Opportunity

Work Step by Step

An example of this would be the opportunity cost of one chip is one shirt in Chipland, and the opportunity cost of one chip is three shirts in Shirtland. Chipland has a comparative advantage in the production of chips because Chipland sacrifices fewer shirts to produce one chip. Therefore, Chipland should produce chips.
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