uppose that the USA can make 15,000,000 cars or 20,000,000 bottles of wine with one year's worth of labor. France can make 10,000,000 cars or 18,000,000 bottles of wine with one year's worth of labor. From these numbers, we can conclude:   Which country has the absolute advantage in producing cars?  Which country has the absolute advantage in producing wine?  Which country has the comparative advantage in producing cars? Which country has the comparative advantage in producing wine? (Show opportunity cost calculations.)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Course: Macroeconomics

Suppose that the USA can make 15,000,000 cars or 20,000,000 bottles of wine with one year's worth of labor. France can make 10,000,000 cars or 18,000,000 bottles of wine with one year's worth of labor. From these numbers, we can conclude:

 

  1. Which country has the absolute advantage in producing cars? 
  2. Which country has the absolute advantage in producing wine? 
  3. Which country has the comparative advantage in producing cars? Which country has the comparative advantage in producing wine? (Show opportunity cost calculations.) 
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