Assume Italy and Niger can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries.

Each farmer in Italy can produce 10 tons of grain or 5 tons of dates in a season. In Niger they can produce 10 tons of grain of due to the climate 25 tons of dates.

Which country has the absolute advantage in producing dates?

Which country has comparative advantage in producing dates?

Which country has the absolute advantage in producing grain?

Which country has the comparative advantage in producing grain?

Question

Business

Nicolas Schroeder

12 March, 19:42

Assume Italy and Niger can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries.

Each farmer in Italy can produce 10 tons of grain or 5 tons of dates in a season. In Niger they can produce 10 tons of grain of due to the climate 25 tons of dates.

Which country has the absolute advantage in producing dates?

Which country has comparative advantage in producing dates?

Which country has the absolute advantage in producing grain?

Which country has the comparative advantage in producing grain?

+1

Answers (1)

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Kaiser · Answer 1

absolute on grain: neither, both produce 10

comparative grain: Italy as renounce to less tonds of dates: 0.5 to 2.5

absolute dates: Niger 25 to 5

comparative dates: Niger as it cost 0.4 tonds of grain to produce 1 ton of dates.

Explanation:

For the absolute, we will check which yield the better number.

Fot the comparative, we will check the opportunity cost:

output/potential output of another product

opp cost grain in Italy: 5/10 = 0.5 tons of dates

opp cost grain in Niger: 25/10 = 2.5 tonds of dates

opp cost dates in Italy: 10/5 = 2 tonds of grain

opp cost dates in Niger 10/25 = 0.4 tonds of grain