ssume that one day's labor in Argentina can produce either 20 units of cloth or 2 units of wine, while in Chile one day's labor can produce either 24 units of cloth or 12 units of wine. Which country has the absolute advantage in producing cloth? Which country has the absolute advantage in producing wine? Which country has the comparative advantage in producing cloth? Which country has the comparative advantage in producing wine? (Show opportunity cost calculations.)
ssume that one day's labor in Argentina can produce either 20 units of cloth or 2 units of wine, while in Chile one day's labor can produce either 24 units of cloth or 12 units of wine. Which country has the absolute advantage in producing cloth? Which country has the absolute advantage in producing wine? Which country has the comparative advantage in producing cloth? Which country has the comparative advantage in producing wine? (Show opportunity cost calculations.)
Chapter2: Economic Tools And Economic Systems
Section: Chapter Questions
Problem 2.3P
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Assume that one day's labor in Argentina can produce either 20 units of cloth or 2 units of wine, while in Chile one day's labor can produce either 24 units of cloth or 12 units of wine.
- Which country has the
absolute advantage in producing cloth? - Which country has the absolute advantage in producing wine?
- Which country has the
comparative advantage in producing cloth? Which country has the comparative advantage in producing wine? (Showopportunity cost calculations.)
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