Th4.1: Diagrammatic Approach Three

Question 1

Refer to PP

Look at Graph 15. What does country 2 have an absolute advantage in?

Answer 1

producing both goods

Question 2

Refer to PP

Look at Graph 15. Which has a comparative advantage in producing good A?

Answer 2

country 1

Question 3

Refer to PP

Look at Graph 15. What is the opportunity cost in the UK of 1 of good B?

Answer 3

1.5 of good A

Question 4

Refer to PP

Look at Graph 15. What is the opportunity cost in Italy?

Answer 4

2 of good A

Question 5

Refer to PP

Look at Graph 15. Who has a comparative advantage in producing good A and good B?

Answer 5

Italy has a comparative advantage in producing good A

UK in good B