INTERNATIONAL BUSINESS CRITICAL THINKING 4
InternationalBusiness Critical Thinking
Fromtable 1, it can be argued that Spain uses less time compared toPortugal in producing either trucks or boats. This is because Spaincan be in a position to produce 3 units of boats while Portugal canproduce only two units of boats. Besides, Spain can be in a positionto produce 12 units of trucks while Portugal can only produce 6 unitsof trucks. Spain has an absolute advantage in the production of bothboats and trucks because it has the capacity of producing more unitsof trucks and boats compared to Portugal. Alternatively, Spain has acomparative advantage in producing trucks because it has the capacityof producing more units of trucks compared to boats (Mankiw &Taylor, 2007).
Fromtable 2, Italy has the ability of producing 1,000 units of wine and200 units of tables while Greece has the capacity of producing 200units of wine and 100 units of tables. From the units produced by thetwo countries, it can be deduced that Italy has an absolute advantagein the production of both wine and tables because it has the capacityof producing more units of both wine and tables compared to the unitsthat Greece can produce in both wine and tables. Since Italy has thecapacity of producing 1,000 units of wine and 200 units of tables, itcan be argued that Italy has a comparative advantage in producingwine because the opportunity cost of producing wine is less comparedto the opportunity cost of producing tables (Morton & Goodman,2003). Alternatively, Greece has the ability to produce 200 units ofwine and 100 units of tables. Since Greece has the ability ofproducing more units of wine compared to tables, it implies that theopportunity cost of producing wine is less compared to that ofproducing tables. Thus, it can be concluded that Greece has acomparative advantage in producing wine.
Akey aspect when it comes to resources is that they exist in limitedform. As such, they have to be utilized well and some choices have tobe considered (Mankiw, 2014). In the use of resources, it isimportant to make a choice concerning the decision that has to befollowed. Opportunity cost describes the cost of the other bestalternative that should be forgone so as to pursue another action(Daniels et al., 2015). In simple terms, opportunity cost can beconsidered as the benefits that one could have received byconsidering taking an alternative option.
Inthe scenario under consideration, it would be worth quitting the joband devoting more time to studies so as to increase the grade pointaverage. The total cost that would be used in dedicating more time tothe studies would be equal to $5,000 for the tuition plus the timededicated to the studies. The total cost that would be forfeited forthe one year that would be used in the studies would be equal to$25,000. However, upon completing a year in the studies, there wouldbe an increase in the amount that I would earn annually from $25,000to $40,000. Since I would earn more after completing studies afterone year, it would be worth to devote more time in the studies. Thebenefits that would be received by devoting more time in studieswould be more compared to the benefits received by not quitting thejob and devoting more time to studies. Therefore, it would be worthquitting the job and dedicating more time to studies.
Daniels,J. D., Radebaugh, L. H., & Sullivan, D. P. (2015). Internationalbusiness: Environments and operations.Harlow: Pearson Education.
Mankiw,N. G. (2014). Principlesof microeconomics.Australia: South-Western.
Mankiw,N. G., & Taylor, M. P. (2007). Microeconomics.London: Thomson.
Morton,J. S., & Goodman, R. J. B. (2003). Advancedplacement economics: Teacher resourcemanual.New York, N.Y: National Council on Economic Education.