Question

Suppose that Spain and Austria both produce rye and cheese. Spain's opportunity cost of producing a pound of cheese is 3 bushels of rye while Austria's opportunity cost of producing a pound of cheese is 11 bushels of rye.

1. By comparing the opportunity cost of producing shoes in the two countries, you can tell that ______ has a comparative advantage in the production of shoes and ______ has a comparative advantage in the production of rye.

Answer 1

By comparing the opportunity cost of producing shoes in the two countries, you can tell that SPAIN has a comparative advantage in the production of cheese and AUSTRIA has a comparative advantage in the production of rye.

Step-by-step explanation:

to know if there is a comparative advantage in the production of a certain good we must check how much of productionin other goods is resinged.

When, Spain stop producing 3 bushel of rye. Austria Stop to produce 11 thus, the cost of make chesee for Austria is higher not for quality but beceause it renounce to much greater quantity of rye.

That's why Spain has an advantage.

Austria has the advantage in the rye production as it renounce to making less cheese:

1/11 for Austria

while 1/3 for Spain