Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Spain 2 liters 0.5 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. Italy 4 liters 4 Wine Suits 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 20 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. Suits 127 11- 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0- 10 Spain 20 Wine 30 40 50 Q ✔
Use the information in the following table on labor productivities in Spain and Italy to answer questions a through f. Output per hour worked Spain 2 liters 0.5 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. Italy 4 liters 4 Wine Suits 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 20 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. Suits 127 11- 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0- 10 Spain 20 Wine 30 40 50 Q ✔
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
Spain
2 liters
0.5
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.
Wine
Suits
Italy
4 liters
4
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 20 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.
Selected:
Delete Clear
Suits
12-
11+
10-
9-
8-
7-
64
5+
4+
3-
24
1-
0-
0
10
Spain
20
Wine
30
40
50
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