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ECON 232 Homework 3 Problem Answers

ECON 232 Homework 3 Problem Answers

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ECON 232 Homework 3 Problem Answers

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Chapter 3

In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine.

 

Who has the absolute advantage in production of sweaters? In the production of wine? How can you tell?

 

Calculate the opportunity cost of producing 6 additional sweaters in France and in Tunisia. Which country has a comparative advantage in the production of sweaters?

 

Calculate the opportunity cost of producing 6 additional bottles of wine in France and Tunisia.

Which country has a comparative advantage in the production of wine?

In this example, is absolute advantage the same as comparative advantage, or not?

 

In what product should France specialize in producing? In what product should Tunisia specialize in producing?

 

Consider trade between Japan and Indonesia involving computers and toaster ovens. The

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