Spain and Italy both produce port and wool with constant opportunity costs. Spain can produce 150 barrels of port if it produces no wool or 100 bolts of wool if it produces no port. Italy can produce 50 barrels of port if it produces no wool or 100 bolts of wool if it produces no port. Using this information, we can conclude that:

Question

Quizplus · Accepted Answer

To determine comparative advantage, we need to compare the opportunity costs of producing each good in each country. Spain has an opportunity cost of 1.5 barrels of port for each bolt of wool produced, whereas Italy has an opportunity cost of 0.5 barrels of port for each bolt of wool produced. Therefore, Italy has a lower opportunity cost for producing wool, making it the country with a comparative advantage in wool production.

Spain and Italy Both Produce Port and Wool with Constant