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Question 1 Problems and Applications Morocco and Tunisia each has 50,000 hours of labor per month. In Morocco, - producing one table of wood requires 6 hours - producing one bottle of olive oil requires 24 hours In Tunisia, producing one table of wood requires 4 hours - producing one bottle of olive oil requires 20 hours Answer the below questions: a) Which country has an absolute advantage in the production of wooden table? Which country has an absolute advantage in the production of olive oil? Explain the reasons in both scenarios. (using table to show your answer is recommended). b) As per the absolute advantage principle, do you think that there is a chance to start international trade between the two countries? Why? c) For Morocco, what is opportunity cost of producing a bottle of olive oil? For Tunisia, what is the opportunity cost of producing a bottle of olive oil? Show your calculations.

Question 1 Problems and Applications Morocco and Tunisia each has 50,000 hours of labor per month. In Morocco, - producing one table of wood requires 6 hours - producing one bottle of olive oil requires 24 hours In Tunisia, producing one table of wood requires 4 hours - producing one bottle of olive oil requires 20 hours Answer the below questions: a) Which country has an absolute advantage in the production of wooden table? Which country has an absolute advantage in the production of olive oil? Explain the reasons in both scenarios. (using table to show your answer is recommended). b) As per the absolute advantage principle, do you think that there is a chance to start international trade between the two countries? Why? c) For Morocco, what is opportunity cost of producing a bottle of olive oil? For Tunisia, what is the opportunity cost of producing a bottle of olive oil? Show your calculations.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 4SCQ: In Germany it takes three workers to make one television and four workers to make one video camera....
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Question 1 Problems and Applications Morocco and Tunisia each has 50,000 hours of labor per month. In Morocco, - producing one table of wood requires 6 hours - producing one bottle of olive oil requires 24 hours In Tunisia, - producing one table of wood requires 4 hours - producing one bottle of olive oil requires 20 hours Answer the below questions: a) Which country has an absolute advantage in the production of wooden table? has an absolute advantage in the production of olive oil? Which Explain the reasons in both scenarios. (using table to show your answer is recommended). b) As per the absolute advantage principle, do you think that there is a chance to start international trade between the two countries? Why? c) For Morocco, what is opportunity cost of producing a bottle of olive oil? For Tunisia, what is the opportunity cost of producing a bottle of olive oil? Show your calculations. d) Which country has a comparative advantage in the production of olive oil? Explain the reason why. e) Which country has a comparative advantage in producing wooden tables (Show your calculations)? Explain the reason.
Transcribed Image Text:Question 1 Problems and Applications Morocco and Tunisia each has 50,000 hours of labor per month. In Morocco, - producing one table of wood requires 6 hours - producing one bottle of olive oil requires 24 hours In Tunisia, - producing one table of wood requires 4 hours - producing one bottle of olive oil requires 20 hours Answer the below questions: a) Which country has an absolute advantage in the production of wooden table? has an absolute advantage in the production of olive oil? Which Explain the reasons in both scenarios. (using table to show your answer is recommended). b) As per the absolute advantage principle, do you think that there is a chance to start international trade between the two countries? Why? c) For Morocco, what is opportunity cost of producing a bottle of olive oil? For Tunisia, what is the opportunity cost of producing a bottle of olive oil? Show your calculations. d) Which country has a comparative advantage in the production of olive oil? Explain the reason why. e) Which country has a comparative advantage in producing wooden tables (Show your calculations)? Explain the reason.
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