FIN 190 Introduction Chang 1 1. The table below shows the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can produce when they completely specialize in one or the other product. Maximum Daily Production with Specialization Southern Ireland Northern Ireland Beer (kegs) 1200 500 Whiskey (bottles) 800 1500 a. Which Ireland has the absolute advantage in producing beer? Which Ireland has the absolute advantage in producing whiskey? b. Which Ireland has the comparative advantage in producing beer? Which Ireland has the comparativ advantage in producing whiskey? Show your calculations. c. Assume Southern Ireland specializes in beer and Northern Ireland specializes in whiskey. Southern Ireland trades 400 kegs of beer for 500 bottles of whiskey from Northern Ireland. Calculate and compa their cost of trade with their opportunity cost of production. What can you conclude? FIN 190 Introduction Chang 2. The table below shows the units of labor needed for Japan and France to produce one boat or one car. Units of Labor Needed for Production Japan France Boat 140 Car 90 120 170 a. Which country has the absolute advantage in producing boats? Which country has the absolute advantage in producing cars? b. Which country has the comparative advantage in producing boats? Which country has the comparative advantage in producing cars? Show your calculations. c. Assume Japan specializes in cars and France specializes in boats. How many cars would Japan be willing to trade with France for boats? Would this trade look attractive to France