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Suppose there are only two countries, India and the United Kingdom. India exports cloth to the United Kingdom and imports machinery. The output per worker
Suppose there are only two countries, India and the United Kingdom. India exports cloth to the United Kingdom and imports machinery. The output per worker per day in each country is shown below: (8 points) Output per Hour Worked per Day Machinery Cloth (yards) United Kingdom 4 8 India 2 16 Which country has an absolute advantage in the production of Machinery? Cloth? Do the countries identify in Question (i) as having an absolute advantage in the production of (a) Machinery and (b) cloth also have a comparative advantage in those areas? Trade between the United Kingdom and India will occur as long as the relative price of machines is between __________
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