Econ question

2007-11-12 7:37 am

Italy and Greece both produce loaves of bread and bottles of olive oil. Suppose that an
Italian worker can produce 10 loaves of bread or 5 bottles of olive oil per hour. Suppose
that a Greek worker can produce 8 loaves of bread or 8 bottles of olive oil per hour.
a) Which country has the absolute advantage in the production of each good? Which
country has the comparative advantage?
b) If Italy and Greece decide to trade, which commodity will Italy trade to Greece?

回答 (1)

2007-11-12 7:53 am

✔ 最佳答案

a) Italy has absolute advantage in the production of bread because Italy is able to produce more of bread with the same amount of resources.
Greece has absolute advantage in the production of olive oil because Greece is able to produce more of olive oil with the same amount of resources.

b) The opportunity cost of producing 1 unit of bread in Italy
= 5/10 units of olive oil
=0.5units of olive oil

The opportunity cost of producing 1 unit of bread in Greek
=8/8units of olive oil
=1unit of olive oil

Italy has a comparative advantage over Greek in producing bread because Italy has a loer opportunity cost of producing bread than Greek. Thus, Italy will trade bread to Greece.

2007-11-11 23:54:24 補充：
loer opportunity cost打錯左應該係lower opportunity cost

參考: 自己

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