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Comparative and absolute advantage,

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Country Bushels of Grapes Computers

Italy 100 300

Canada 150 600

Using this scenario, can you explain to me...

Who should specialize and in what?
Who has an absolute advantage and in what?
Who has a comparative advantage and in what?
What is the opportunity cost for Italy if they only produce 1 bushel of grapes? What about 1 computer?
How could we get the greatest output of both?

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Solution Summary

An overview of opportunity costs is revealed. The specialization and absolute advantages are determined.

Solution Preview

Country Opportunity Cost of producing
Grapes per bushel per Computers
Italy 3 computers 1/3 bushel of grapes
Canada 4 computers 1/4 ...

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