Calculate this ratio and consider it the real world - is


Italy and Greece producing olives (one product).

Italy                                                                Greece

Output: 120 units                                            Output:  60 units

Labor:   30 workers                                         Labor:    30 workers

Wages:   $3                                                     Wages:   $2

Exports: $100                                                  Exports: $50

(Calculate productivities for Italy and Greece and the Italy's relative productivities for each industry if there is more than one product. Compare Italy's relative productivity by industry (here we have one industry) with the relative wage ratio of Italy over Greece (1) above)

  • Arelative export performance comparative advantageforItalyover Greece in olives is measured by a ratio of Italian exports of olives to Greek exports that exceeds one. Calculate this ratio and consider it the real world (2) above.
  • Determine thecomparative advantage according to the classical model. Is the classical model's prediction of comparative advantage consistent with the comparative advantage in relative export performance given by the above example?

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Microeconomics: Calculate this ratio and consider it the real world - is
Reference No:- TGS01005697

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