Suppose that each worker in Argentina can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Ecuador can produce either 80 units of food per hour or 320 units of machinery per hour.
a. Explain which country has an absolute advantage in the production of food. Which country has an absolute advantage in the production of machinery?
b. Calculate the opportunity costs for food and machinery in Argentina and Ecuador.
c. Which country, if any, has a comparative advantage in the production of food? Explain why.