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denausor denausor
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3 months ago
Suppose Spain is currently producing 90 units of wine and 10 units of cheese, but to produce 10 more units of cheese it must sacrifice 30 units of wine. Further, suppose that Portugal produces 45 units of wine and 45 units of cheese, but to produce 10 more units of cheese it must sacrifice only 10 units of wine. It can be concluded that

▸ Spain has a comparative advantage in the production of wine and Portugal has a comparative advantage in the production of cheese.

▸ Spain has an absolute advantage in both wine and cheese production.

▸ Portugal has an absolute advantage in wine production and Spain has an absolute advantage in cheese production.

▸ Portugal has an absolute advantage in both wine and cheese production.

▸ more information is needed to conclude anything about comparative advantage in either country.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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danterichdanterich
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Spain has a comparative advantage in the production of wine and Portugal has a comparative advantage in the production of cheese.
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