England and France can produce both wine and cloth. The English use 80 labor-hours to produce a unit of cloth and 40 labor-hours to produce a unit of wine. The French use 100 labor-hours to pro duce a unit of cloth.
Fill in the blank cell--labor-hours to produce a unit of French wine--to show France's absolute advantage in producing wine. Explain.
Answer to relevant QuestionsWhat do you think would happen to our idea of the basic economic problem if we discovered a natural resource that could reproduce itself any number of times and could be transformed by labor into any good or service? Before ...Fill in the blank cell--labor-hours to produce a unit of French wine--to show France's comparative advantage in producing cloth. Explain. How can the government fix an exchange rate? Discuss the limitations that a government faces in maintaining a fixed rate Change the numbers in the table in practice problem 1 so that the equilibrium exchange rate is 6 pounds per U.S. dollar. What explanation can you offer for such changes? Describe the economic logic associated with the big-push development strategy. What are its pitfalls?
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