6. Consider the following three countries. Each can produce wheat, sheep, ore, brick, or wood. Production per

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6. Consider the following three countries. Each can produce wheat, sheep, ore, brick, or wood. Production per worker is shown in the table. Each country has an equal number of workers. Redistan Whiteny Blueland Wheat 1 1 2 Sheep 1 2 2 Ore 1 2 0 Brick 2 1 3 Wood 2 1 1

a. Which country has an absolute advantage in producing wheat?

b. In terms of the opportunity cost of sheep, which country has a comparative advantage in producing brick?

c. A fourth country (Yellowlia) offers to give a unit of ore in exchange for one of wood. Which countries would probably want to trade with Yellowlia?

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Macroeconomics

ISBN: 9780134492056

2nd Edition

Authors: Daron Acemoglu, David Laibson, John List

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