1. In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. a. Who has the absolute advantage in production of sweaters? In the production of wine? How can you tell? b. Calculate the opportunity cost of producing 6 additional sweaters in France and in Tunisia. Which country has a comparative advantage in the production of sweaters? c. Calculate the opportunity cost of producing 6 additional bottles of wine in France and Tunisia. Which country has a comparative advantage in the production of wine? d. In this example, is absolute advantage the same as comparative advantage, or not? e. In what product should France specialize in producing? In what product should Tunisia specialize in producing? 3. The table that follows shows how the average costs of production for airplanes at a certain factory changes as the number of airplanes built at that factory increases. a. Based on this data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? b. If the equilibrium quantity of airplanes demanded is 400, can this economy take full advantage of economies of scale? What about if quantity demanded is 300 airplanes? 200 airplanes? 100 airplanes? c. Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers. Average Cost Quantity Built of Production 50 $30 million each 100 $20 million