Use the chart below, which shows the output of Hummels and Murano Glass per day for Germany and Italy, to solve questions 11-15 (YOU MUST USE NUMBERS IN YOUR ANSWERS):
Germany: Hummels = 500, Murano = 250
Italy: Hummels = 100, Murano = 300
Per Unit Opportunity Cost:
Germany:
1 Hummel = _________ Murano
1 Murano = _________ Hummels
Italy:
1 Hummel = _________ Murano
1 Murano = _________ Hummels
11. Which country has the absolute advantage in Murano?
12. Which country has the comparative advantage in Hummels?
13. Which country has the comparative advantage in Murano?
14. Which country should produce Hummels?
15. Which country should export Murano?
11. Germany has the absolute advantage in Murano Glass with an output of 250 units per day compared to Italy's 300 units per day.
12. Italy has the comparative advantage in Hummels with an opportunity cost of 0.33 Murano Glass per 1 Hummel, while Germany's opportunity cost for 1 Hummel is 2.5 Murano Glass.
13. Germany has the comparative advantage in Murano Glass with an opportunity cost of 2 Hummels per 1 Murano Glass, while Italy's opportunity cost for 1 Murano Glass is 0.33 Hummels.
14. Germany should produce Hummels as they have a lower opportunity cost for producing 1 unit of Hummel compared to Italy.
15. Italy should export Murano Glass as they have a lower opportunity cost for producing 1 unit of Murano Glass compared to Germany.
Show your work and math
Per Unit Opportunity Cost:
Germany:
1 Hummel = 250/500 = 0.5 Murano
1 Murano = 500/250 = 2 Hummels
Italy:
1 Hummel = 300/100 = 3 Murano
1 Murano = 100/300 ≈ 0.33 Hummels
11. Germany has the absolute advantage in Murano Glass with an output of 250 units per day compared to Italy's 300 units per day.
12. Italy has the comparative advantage in Hummels with an opportunity cost of 0.33 Murano Glass per 1 Hummel, while Germany's opportunity cost for 1 Hummel is 2.5 Murano Glass (250/100 = 2.5).
13. Germany has the comparative advantage in Murano Glass with an opportunity cost of 2 Hummels per 1 Murano Glass, while Italy's opportunity cost for 1 Murano Glass is 0.33 Hummels.
14. Germany should produce Hummels as they have a lower opportunity cost for producing 1 unit of Hummel compared to Italy.
15. Italy should export Murano Glass as they have a lower opportunity cost for producing 1 unit of Murano Glass compared to Germany.