Question

(35 POINTS) Given the data in the chart above, which of the following statements is true?

a. France has a comparative advantage in olive oil production.
b. Greece has an absolute advantage in wine and olive oil production.
c. Greece has a comparative advantage in wine production.
d. Italy has an absolute advantage in wine and olive oil production.

Answer 1

Italy requires less worker hours to produce both olive oil and wine. Therefore the answer is D. Italy has an absolute advantage in wine and oil production.

Answer 2

Answer: d. Italy has an absolute advantage in wine and olive oil production.

Explanation: From the data provided on the table above it could be observed that Italy required the assistance or help of 60 workers per hour to produce one liquid unit of olive oil and wine, unlike Greece and France who required 95 personnel each an hour to also produce one liquid unit. So it can clearly be stated that Italy has an advantage.