tollowing table shows the production capabilities of them in produ ermany has 10
ID: 1126051 • Letter: T
Question
tollowing table shows the production capabilities of them in produ ermany has 100 production units and Prance has 50 production units. The ing two goods, computer and wine. Computer 3/production unit 1/productioin unit wine 3/production un 2/prófuction unit it e2 ermany low France 5 a. Which country has absolute advantage in computer production? Which country in wine production? in b. Which country has comparative advantage in computer production? Which country wine production? Suppose each country specializes in the production of the good in which it has comparative advantage. How much is the production of computers for the world (two countries combined)? The production of wine? c. Suppose each country does what is described in part c, and trade with the other country at the terms of trade of I computer for 1.5 wine. How many computers and wine each country has after specialization and trade? As you might know, there are many possible right answers for this part of the question. d.Explanation / Answer
a. Country France has absolute advantage in both computer and France as France would require less of units to produce both of the goods
b. Country France has comparative advantage in production of computer as it can produce 50 units of computer. While Country Germany has comparative advantage in production of Wine as it can produce 33 units of Wine.
c. After specialization Country France can produce 50 units of computer, while Country Germany can produce 33 units of Wine.
d. For, 33 computer it needs 49.5 units of wine.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.