Related to Solved Problem questions The table below shows t

Related to Solved Problem # questions The table below shows the hourly output per worker in two industries i Chile and Argentina Use this table to answer the follow ng Output per hour of work Hats Beer Chile Argentina a. Chile has an absolute advantage in the production of hats, and Chile has an absolute advantage in the production of beer b. Chile has a comparative advantage in the production of hats, and Argentina has a comparative advantage in the production of beer. c. Suppose that Chile and Argentina currently do not trade with each other. Each has 1,000 hours of labor to use for producing hats and beer, and the countries are currently producing the amounts of each good shown in the table below. Using this information, give a numerical example of how Chile and Argentina can both gain from complete specialization and trade. Assume that after trading begins, one hat can be exchanged for one barrel of beer Hats 6,800 600 Beer 600 800 Chile Complete the table below The table represents the amount of hats and beer after trading for each country (enter your responses as integer values) Beer LT 600 Chile 600 Argentina

Solution

The last chart will be

Chile has comparative advantage in hat so will produce only hat and Argentina have comparative advantage in beer so will produce only beer.

	Hats	Beer
Chile	8000	0
Argentina	0	2000