Two countries, A and B, produce cotton and wine. The table below describes theirmaximum daily production of each good in kilograms for cotton and liters for wine.Maximum daily production Country A Country BCotton4040Wine5040Which country has the comparative advantage in the production ofa.wine? Why?b.If these two countries trade, which good will each of them export?Why?

Name: Two countries, A and B, produce cotton and wine. The table below desc
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Description: Two countries, A and B, produce cotton and wine. The table below describes theirmaximum daily production of each good in kilograms for cotton and liters for wine.Maximum daily production Country A Country BCotton4040Wine5040Which country has the com

Answered: Two countries, A and B, produce cotton…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 6PA

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Two countries, A and B, produce cotton and wine. The table below describes their
maximum daily production of each good in kilograms for cotton and liters for wine.
Maximum daily production Country A Country B
Cotton
40
40
Wine
50
40
Which country has the comparative advantage in the production of
a.
wine? Why?
b.
If these two countries trade, which good will each of them export?
Why?

Expert Solution

Step 1

Comparative advantage arises when the country produces good at lower opportunity cost than other country.

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