Question

"For country​ North, the opportunity cost incurred when 3 tractors are produced is 21 watches. For country​ South, the opportunity cost incurred when 5 tractors are produced is 100 watches. Which country has the comparative advantage in the production of​ tractors?"

Answer 1

Country North has the comparative advantage in the production of tractor

Explanation:

The principle of comparative advantage states that a country should specialize in the production of goods in which it have comparative cost advantage over other nations. i.e A country should focus on the production of the goods in which it has a lower opportunity cost in producing than someone else.

The question given shows that Country North has a lower opportunity cost (which is 21 watches) if it produces 3 tractors compared to country south which has an opportunity cost of 100 watches when it produces 5 tractors.

Hence, we can say that country North has a comparative advantage in the production of Tractors over country south because its opportunity cost when its produces tractors is lower than that of the country south