2 of 21 Ma Assume Sweden and Tunisia can both produce grain

2 of 21 Ma Assume Sweden and Tunisia can both produce grain and dates, and that the only limited resource is the farming labor force, meaning that land, water, and all other resources are plentiful in both countries. Each farmer in Sweden can produce 10 metric tons of grain or 5 metric tons of dates in a season. Each farmer in Tunisia can also produce 10 metric tons of grain or 25 metric tons of dates. Please answer the four questions below. 1. Which country has the absolute advantage in producing dates? 2. Which country has the absolute advantage in producing grain O Tunisia Sweden O Tunisia O Sweden O Neither O Neither 4. Which country has the comparative advantage in producing grain 3. Which country has the comparative advantage in producing dates O Tunisia 0 Sweden O Neither Tunisia O Sweden O Neither

Solution

Tunisia has absolute advantage in production of dates as Tunisia can produce 25 MT of dates using same resources while Sweden could produce only 5 Mt

Neither country has absolute advantage in production of grains as Tunisia and sweden both can produce 10 MT of dates using same resources.

Tunisia has comparitive advantage in production of dates as Tunisia can produce 1 MT of dates at a opportunity cost of 0.4MT of grain while Sweden could produce 1 Mt at opportunity cost of 2 MT of grain

Sweden has comparitive advantage in production of grains as Sweden can produce 1 MT of grains at a opportunity cost of 0.5MT of dates while Tunisia could produce 1 Mt at opportunity cost of 2.5 MT of dates