Suppose that France and Germany both produce schnitzel and wine. The following table shows combinations of the goods that each country can produce in a day:

a. Who has a comparative advantage in producing wine? Who has a comparative advantage in producing schnitzel?
b. Suppose that France is currently producing 1 bottle of wine and 6 pounds of schnitzel, and Germany is currently producing 3 bottles of wine and 6 pounds of schnitzel. Demonstrate that France and Germany can both be better off if they specialize in producing only one good and then trade for the other.

Transcribed Image Text:

France Germany Wine Schnitzel Wine Schnitzel (pounds) (bottles) (pounds) (bottles) 8 15 6 12 4 2 3 3 4 4 3