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Suppose two countries, Canada and Germany, produce high tech medical equipment and electronic automotive components. The table below shows the monthly level of production for
Suppose two countries, Canada and Germany, produce high tech medical equipment and electronic automotive components. The table below shows the monthly level of production for each good produced by each of the countries. Opportunity Cost Task Germany Canada Germany Canada Medical Equipment 5,000 3,000 0.5 automotive components 0.33 Automotive Components Automotive Components 10,000 9,000 2 Medical Equipment 3 Medical Equipment, b) Does either country have an absolute advantage? Does either country have a comparative advantage? Explain. c) Assume that each country requires 45,000 units of each product. Will specialization and trade occur? Show this numerically and explain
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