Two countries, A and B, produce cotton and wine. The table below describes their maximum daily production of each good in kilograms for cotton and liters for wine. Maximum daily production Country A Country B Cotton Wine 40 40 50 40 a. Which country has the comparative advantage in the production of wine? Why? b. If these two countries trade, which good will each of them export?
Two countries, A and B, produce cotton and wine. The table below describes their maximum daily production of each good in kilograms for cotton and liters for wine. Maximum daily production Country A Country B Cotton Wine 40 40 50 40 a. Which country has the comparative advantage in the production of wine? Why? b. If these two countries trade, which good will each of them export?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Comparative advantage arises when the country produces good at lower opportunity cost than other country.
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