Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started