Suppose that France and Germany both produce wine and schnitzel. The table below shows combinations of...

Suppose that France and Germany both produce wine and schnitzel. The table below shows combinations of the goods that each country can produce in a day.

France

Germany

Wine (Bottles)	Schnitzel (Pounds)	Wine (Bottles)	Schnitzel (Pounds)
0	12	0	25
1	9	1	20
2	6	2	15
3	3	3	10
4	0	4	5
		5	0

1. Who has the comparative advantage in producing wine and who has the comparative advantage in producing schnitzel?

A. France has a comparative advantage producing schnitzel and Germany has a comparative advantage producing wine.

B. France has a comparative advantage producing wine and schnitzel.

C. Neither has a comparative advantage producing wine or schnitzel.

D. Germany has a comparative advantage producing wine and schnitzel.

E. France has a comparative advantage producing wine and Germany has a comparative advantage producing schnitzel.

2. Suppose that France is currently producing 1 bottle of wine and 9 pounds of schnitzel and Germany is currently producing 3 bottles of wine and 10 pounds of schnitzel. Then, assume instead that France and Germany specialize by producing only the good for which they have a comparative advantage and then trade 3 bottles of wine for 12 pounds of schnitzel. After specialization and trade, France gains by consuming the same amount of wine and [ answer ] additional pound(s) of schnitzel (enter a numeric response using an integer) and Germany gains by consuming the same amount of wine and [ answer ] additional pound(s) of schnitzel.

Expert Solution

Rahul Sunny answered 1 year ago

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