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Cheese Whiskey Home aLC = 4 hours per pound aLW = 5 hours per gallon Foreign a*LC = 2 hours per pound a*LW = 4

Cheese Whiskey Home aLC = 4 hours per pound aLW = 5 hours per gallon Foreign a*LC = 2 hours per pound a*LW = 4 hours per gallon where: aLC = number of labor hours needed to produce a unit of cheese in Home; aLW = number of labor hours needed to produce a unit of whiskey in Home; a*LC = number of labor hours needed to produce a unit of cheese in Foreign; a*LW = number of labor hours needed to produce a unit of whiskey in Foreign. Part 2 Which of the following statements is true? A. Foreign has the absolute advantage in both cheese and whiskey production and the comparative advantage in whiskey production. B. Home has the absolute advantage in both cheese and whiskey production and the comparative advantage in cheese production. C. Home has the absolute and comparative advantage in whiskey production. D. Foreign has the absolute advantage in both cheese and whiskey production and the comparative advantage in cheese production

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