Two countries: Italy and Greece producing olives
Output: 150 units Output: 80 units
Labor : 30 workers Labor: 40 workers
Wages: $5 Wages: $2
Exports: $100 Exports: $50
- A real word comparative advantage for Italy over 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.
- Determine the comparative advantage according to the classical model. Is the classical model's prediction of comparative advantage consistent with the comparative advantage in the real world given by the above example?