Suppose there are two countries and two goods- Country S Country F 10 labor hrs/unit of output Grapes Honey 12 5 a. Which country has an absolute advantage in grapes? In honey? b. Can the countries...


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Suppose there are two countries and two goods-<br>Country S<br>Country F<br>10 labor hrs/unit of output<br>Grapes<br>Honey<br>12<br>5<br>a. Which country has an absolute advantage in grapes? In honey?<br>b. Can the countries specialize according to absolute advantage? Why? If not, can they<br>specialize on the basis of comparative advantage? If so, why?<br>c. Specify the directions of comparative advantage.<br>d. What are the per unit of output gains/losses from specialization in this case?<br>

Extracted text: Suppose there are two countries and two goods- Country S Country F 10 labor hrs/unit of output Grapes Honey 12 5 a. Which country has an absolute advantage in grapes? In honey? b. Can the countries specialize according to absolute advantage? Why? If not, can they specialize on the basis of comparative advantage? If so, why? c. Specify the directions of comparative advantage. d. What are the per unit of output gains/losses from specialization in this case?

Jun 10, 2022
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