1. In the text we looked at trade graphically, but now you get to think about it numerically. Don't worry though, we'll start off easy. Suppose the table to the right gives possible outputs for two countries, each of which produces two goods, burritos and computers. Based on the information in the table, you know that:
- Country 1 has a comparative and absolute advantage in the production of both computers and burritos.
- Country 2 has a comparative and absolute advantage in the production of both computers and burritos.
- Country 1 has a comparative but not an absolute advantage in the production of computers.
- Country 2 has a comparative but not an absolute advantage in the production of computers.
- Country 2 has a comparative and absolute advantage in the production of computers.
|
| Country 1 |
Country 2 |
| Burr. | Comp. | Burr. | Comp. |
| 150 | 0 | 100 | 0 |
| 120 | 10 | 80 | 20 |
| 90 | 20 | 60 | 40 |
| 60 | 30 | 40 | 60 |
| 30 | 40 | 20 | 80 |
| 0 | 50 | 0 | 100 |
|
