Question: Suppose there are two countries producing two goods using only labor. Refer to the following table to answer the questions. a. Which country has absolute

Suppose there are two countries producing two goods using only labor. Refer to the following table to answer the questions. Pairs of shoes produced per hour Bottles of wine produced per hour

a. Which country has absolute advantage in the production of shoes? Wine?

b. Which country has a comparative advantage in the production of shoes? Wine?

c. Does Italy gain from trading with France? Briefly explain why or why not using the Ricardian model.

Pairs of shoes produced per hour Bottles of wine produced per hour Comparative advantage Italy 6 2 ? France 3 1 ? Absolute Advantage ? ?

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