In Norway, one worker can produce either 8 pounds of smoked fish or 8 barrels of oil. In Saudi Arabia, one worker can produce either 5 pounds of smoked fish or 10 barrels of oil. In this example, Norway should produce both goods Norway should specialize in the production of oil and Saudi Arabia in the production of fish Saudi Arabia should specialize in the production of oil and Norway should specialize in the production of fish Saudi Arabia has an absolute advantage in the production of both goods

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
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In Norway, one worker can produce either 8 pounds of smoked fish or 8 barrels of oil.
In Saudi Arabia, one worker can produce either 5 pounds of smoked fish or 10 barrels
of oil. In this example,
Norway should produce both goods
Norway should specialize in the production of oil and Saudi Arabia in the production of fish
Saudi Arabia should specialize in the production of oil and Norway should specialize in the
production of fish
Saudi Arabia has an absolute advantage in the production of both goods
Transcribed Image Text:In Norway, one worker can produce either 8 pounds of smoked fish or 8 barrels of oil. In Saudi Arabia, one worker can produce either 5 pounds of smoked fish or 10 barrels of oil. In this example, Norway should produce both goods Norway should specialize in the production of oil and Saudi Arabia in the production of fish Saudi Arabia should specialize in the production of oil and Norway should specialize in the production of fish Saudi Arabia has an absolute advantage in the production of both goods
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