Answer to Question #228582 in Macroeconomics for don

Question

From the table below:

 

The numbers represent the number of labour hours it will take to produce a unit of the given good.

 

Spain

France

Grapes

3

9

Textiles

1

2

 

(i) Which country has absolute advantages in the production of which good? Show the figures. (2 Marks)

 

Which country has comparative advantage in the production of which good? Shows the figures.

Answer 1

(i) France has absolute advantage in neither garps nor tetiles.

farnce takes more time in both than spain.

(ii)spain has comparative advantage in grapes.

spain needs to forgo 3 textiles to make a grape while france needs to forgo 4.5 textiles to make a grape.