Use the information in the following table on labor productivities in Italy and the United Kingdom to answer questions a. through f. a. Is there an absolute advantage for each country in wine or wool?...

Use the information in the following table on labor productivities in Italy and the United Kingdom to answer questions a. through f.

a. Is there an absolute advantage for each country in wine or wool? Why?

b. Which commodity should Italy specialize in? What about the United Kingdom?

c. What are the gains from specialization for each country?

d. What is the opportunity cost of wine? Of wool?

e. Which country has a comparative advantage in wine? In wool? Explain your answer.

f. Draw a hypothetical PPC for the United Kingdom and label its slope. Suppose that the United Kingdom follows its comparative advantage in deciding where to produce on its PPC. Label its production point. What are the upper and lower bounds for the trade price of wine and wool?