Suppose that the productivity per worker in the caviar and salmon industries of Canada and Russia are as follows: $\begin{array} { l c c c }
& \underline{ { \text { Output in Thousands of Kilograms } }} \
& \text { Caviar } && \text { Salmon } \
\text { Canada } & 2 & \text { or } & 3 \
\text { Russia } & 4 & \text { or } & 1
\end{array}$ a) Which country has the absolute advantage in producing caviar?
b) Which country has the absolute advantage in producing salmon?
c) Which country has the comparative advantage in producing caviar?
d) Which country has the comparative advantage in producing salmon?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Question

Suppose that the productivity per worker in the caviar and salmon industries of Canada and Russia are as follows: $\begin{array} { l c c c } 
& \underline{  { \text { Output in Thousands of Kilograms } }} \
 & \text {  Caviar } && \text { Salmon } \
\text { Canada } & 2 & \text { or } & 3 \
\text { Russia  } & 4 & \text { or } & 1
\end{array}$ a) Which country has the absolute advantage in producing caviar?
b) Which country has the absolute advantage in producing salmon?
c) Which country has the comparative advantage in producing caviar?
d) Which country has the comparative advantage in producing salmon?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Quizplus · Accepted Answer

The Answer of Suppose that the productivity per worker in the caviar and salmon industries of Canada and Russia are as follows: $\begin{array} { l c c c } 
& \underline{  { \text { Output in Thousands of Kilograms } }} \
 & \text {  Caviar } && \text { Salmon } \
\text { Canada } & 2 & \text { or } & 3 \
\text { Russia  } & 4 & \text { or } & 1
\end{array}$ a) Which country has the absolute advantage in producing caviar?
b) Which country has the absolute advantage in producing salmon?
c) Which country has the comparative advantage in producing caviar?
d) Which country has the comparative advantage in producing salmon?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Suppose That the Productivity Per Worker in the Caviar and Salmon