High School

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Suppose Italy can make either 1,000 statues or 700 bottles of wine. Suppose the U.S. can make either 100 statues or 900 bottles of wine. How should each specialize?

Answer :

America should specializes in making statues, as America has an absolute advantage and comparative advantage in making statues(higher total production, lower opportunity cost of producing statues ), and Italy specializes in producing wine as it has absolute advantage and comparative advantage in producing wine(more total production of wine and lower opportunity cost of producing wine)

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Rewritten by : Barada

Italy should produce both statues and wine.