England and Scotland both produce whisky and sweaters. Suppose that an English worker can produce 50 bottles whisky per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 bottles whisky per hour or 2 sweaters per hour.
a. What country has the absolute advantage in the production of each good? Which country has the comparative advantage.
b. If England and Scotland decide to trade, which commodity will Scotland trade to England? Show your work and explain.
c. If a Scottish worker could produce only 1 sweater per hour, will Scotland still gain from trade? Will England still gain from trade? Explain.