Determine the comparative advantage according to the

Two countries: Italy and Greece producing olives

Italy                                                                Greece

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?

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Macroeconomics: Determine the comparative advantage according to the
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