Question
Consider the following table of countries and their associated maximum production possibilities for wheat and wool below. Note that these numbers represent tonnes of output
Consider the following table of countries and their associated maximum production possibilities for wheat and wool below. Note that these numbers represent tonnes of output per day.
Country | Wheat | Wool |
---|---|---|
Finland | 15 | 20 |
Iceland | 10 | 5 |
Based on the data in the table above, answer the following questions.
Answer should specialise in the production of wheat, as they have comparative advantage in producing wheat.
Answer should specialise in the production of wool, as they have comparative advantage in producing wool.
Suppose that a proposal is made from one of the countries that three tonnes of wool would be exchanged for three tonnes of wheat. The response to this proposal will be
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