Problem
The tables below show the production possibilities for two hypothetical countries, Italia and Nire. Which country has the comparative advantage in producing butter? Which country has the comparative advantage in producing guns? What would be a mutually agreeable rate of exchange between the countries?
|
ltalia
|
Nire
|
|
Guns
|
Butter
|
Guns
|
Butter
|
|
12
|
0
|
16
|
0
|
|
8
|
2
|
12
|
1
|
|
4
|
4
|
8
|
2
|
|
0
|
6
|
4
|
3
|
|
|
0
|
4
|
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.