Question: Using the data in the accompanying table, answer the following questions: (a) For which good does Canada have a comparative advantage? (b) For which good

Using the data in the accompanying table, answer the following questions:
(a) For which good does Canada have a comparative advantage?
(b) For which good does Italy have a comparative advantage?
(c) What might be a set of favorable terms of trade for the two countries?
(d) Prove that both countries would be better off in the specialization-trade case than in the no-specialization€“no-trade case.

Points on Production Possibilities Frontier CANADA ITALY Good X 150 100 50 Good Y Good X 90 60 30 Good Y 25 50 75 60 120 180

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a Canada has a comparative advantage in the production of good X In Canada the opportunity cost of producing 1 unit of X is 12Y In Italy the opportuni... View full answer

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