The following table describes the number of yards of cloth and barrels of wine that can be produced with a week’s worth of labor in England and Portugal. Assume that no other inputs are needed.                                                   In England                                        In Portugal Cloth                                            8 yards                                             12 yards Wine                                            2 barrels                                           6 barrels d.Which country has an absolute advantage in the production of which good(s)? Which country has a comparative advantage in the production of which good(s)? e.If the countries start trading with each other, which country will specialize and export which good? f.What can be said about the price at which trade will take place?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
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  1. The following table describes the number of yards of cloth and barrels of wine that can be produced with a week’s worth of labor in England and Portugal. Assume that no other inputs are needed.

 

                                                In England                                        In Portugal

Cloth                                            8 yards                                             12 yards

Wine                                            2 barrels                                           6 barrels

d.Which country has an absolute advantage in the production of which good(s)? Which country has a comparative advantage in the production of which good(s)?

e.If the countries start trading with each other, which country will specialize and export which good?

f.What can be said about the price at which trade will take place?

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