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Absolute and Comparative Advantage Analysis

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1. Referring to Table 1, what can be concluded about Spain's absolute and comparative advantage for both boats and trucks?

Maximum Output

Table 1:

Boats (Spain 3) (Portugal 2)
Trucks (Spain 12) ( Portugal 6)

2. Referring to Table 2:
 Who has absolute advantage in what good?
 Italy has comparative advantage in what good?
 Greece has comparative advantage in what good?

Table 2:
Maximum Output

Wine (Italy 1000) (Greece 200)

Tables (Italy 200) (Greece 100)

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Solution Summary

An analysis of absolute advantage and comparative advantage. The production of 2 countries are examined.

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Output comparison
1. Referring to Table 1, what can be concluded about Spain's absolute and comparative advantage for both boats and trucks?
Maximum Output
Table 1:
Boats (Spain 3) (Portugal 2)
Trucks (Spain 12) ( Portugal 6)
2. Referring to Table 2:
• Who has absolute advantage in what good?
• Italy has comparative advantage in what good?
• Greece has comparative advantage in what good?
Table 2:
Maximum Output
Wine (Italy 1000) (Greece 200)
Tables (Italy 200) (Greece 100)

Maximum Output
Table 1:
Boats (Spain 3) (Portugal 2)
Trucks (Spain 12) ( Portugal 6)

Table 1 Problem:
An absolute advantage is a comparison between the productivity of different economies or producers. Producer that utilizes a smaller quantity inputs to produce a good has an absolute advantage at producing that good.
In our example, Spain produces 3 units of boats and 12 units of trucks as compared to Portugal producing ...

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