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Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Wine Suits Spain 4 liters 1 Italy 8 liters 8 a. The absolute advantage in wine is held by Italy and the absolute advantage in suits is held by Italy. b. The relative price of wine in Spain is 0.25 suits (round to two decimal places) and the relative price of wine in Italy is 1 suit c. The opportunity cost of wine in Spain is 0.25 suits(round to two decimal places) and the opportunity cost of wine in Italy is 1 suit. d. The comparative advantage in wine is held by Spain and the comparative advantage in suits is held by Italy. e. The trade price of wine has an upper bound of 1 suit and a lower bound of 0.25 suits (round to two decimal places). f. Assume Spain has 10 hours it can allocate toward the production of wine and suits. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw Spain's PPC given the data above. Properly label your line. 2.) Using the point drawing tool, assume Spain produces according to its comparative advantage and identify its production point. Label this point A 3.) Using the line drawing tool, given the the trade price of suits is two liters of wine per suit, draw the trade line showing how Spain can gain from trade. Properly label your line. Carefully follow the instructions above, and only draw the required objects. 慧 12 11- 10 9 8- 7- S 4- 3- 2- 1- 10 Spain 20 Wine 30 TAM

Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Wine Suits Spain 4 liters 1 Italy 8 liters 8 a. The absolute advantage in wine is held by Italy and the absolute advantage in suits is held by Italy. b. The relative price of wine in Spain is 0.25 suits (round to two decimal places) and the relative price of wine in Italy is 1 suit c. The opportunity cost of wine in Spain is 0.25 suits(round to two decimal places) and the opportunity cost of wine in Italy is 1 suit. d. The comparative advantage in wine is held by Spain and the comparative advantage in suits is held by Italy. e. The trade price of wine has an upper bound of 1 suit and a lower bound of 0.25 suits (round to two decimal places). f. Assume Spain has 10 hours it can allocate toward the production of wine and suits. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw Spain's PPC given the data above. Properly label your line. 2.) Using the point drawing tool, assume Spain produces according to its comparative advantage and identify its production point. Label this point A 3.) Using the line drawing tool, given the the trade price of suits is two liters of wine per suit, draw the trade line showing how Spain can gain from trade. Properly label your line. Carefully follow the instructions above, and only draw the required objects. 慧 12 11- 10 9 8- 7- S 4- 3- 2- 1- 10 Spain 20 Wine 30 TAM

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Wine Suits Spain 4 liters 1 Italy 8 liters 8 a. The absolute advantage in wine is held by Italy and the absolute advantage in suits is held by Italy b. The relative price of wine in Spain is 0.25 suits (round to two decimal places) and the relative price of wine in Italy is 1 suit. c. The opportunity cost of wine in Spain is 0.25 suits (round to two decimal places) and the opportunity cost of wine in Italy is 1 suit. d. The comparative advantage in wine is held by Spain and the comparative advantage in suits is held by Italy e. The trade price of wine has an upper bound of 1 suit and a lower bound of 0.25 suits (round to two decimal places). f. Assume Spain has 10 hours it can allocate toward the production of wine and suits. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw Spain's PPC given the data above. Properly label your line. 2.) Using the point drawing tool, assume Spain produces according to its comparative advantage and identify its production point. Label this point A. 3.) Using the line drawing tool, given the the trade price of suits is two liters of wine per suit, draw the trade line showing how Spain can gain from trade. Properly label your line. Carefully follow the instructions above, and only draw the required objects. Suits 12- 11+ 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0 0 10 Spain 20 Wine ts 30 A 40 50
Transcribed Image Text:Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Wine Suits Spain 4 liters 1 Italy 8 liters 8 a. The absolute advantage in wine is held by Italy and the absolute advantage in suits is held by Italy b. The relative price of wine in Spain is 0.25 suits (round to two decimal places) and the relative price of wine in Italy is 1 suit. c. The opportunity cost of wine in Spain is 0.25 suits (round to two decimal places) and the opportunity cost of wine in Italy is 1 suit. d. The comparative advantage in wine is held by Spain and the comparative advantage in suits is held by Italy e. The trade price of wine has an upper bound of 1 suit and a lower bound of 0.25 suits (round to two decimal places). f. Assume Spain has 10 hours it can allocate toward the production of wine and suits. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw Spain's PPC given the data above. Properly label your line. 2.) Using the point drawing tool, assume Spain produces according to its comparative advantage and identify its production point. Label this point A. 3.) Using the line drawing tool, given the the trade price of suits is two liters of wine per suit, draw the trade line showing how Spain can gain from trade. Properly label your line. Carefully follow the instructions above, and only draw the required objects. Suits 12- 11+ 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0 0 10 Spain 20 Wine ts 30 A 40 50
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