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Spain and Italy both produce port and wool with constant opportunity costs. Spain can produce 150 barrels of port if it produces no wool or
Spain and Italy both produce port and wool with constant opportunity costs. Spain can produce 150 barrels of port if it produces no wool or 100 bolts of wool if it produces no port. Italy can produce 50 barrels of port if it produces no wool or 150 bolts of wool if it produces no port. When international trade takes place, each country specializes completely in the production of the good in which it has a comparative advantage: 1 barrel of port exchanges for 1 bolt of wool and Spain exports 50 units of port. We can conclude that Italy produces _____ units of port and _____ units of wool and that Italy consumes _____ units of port and _____ units of wool
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