In Italy, an automobile can be produced by 8 workers in one day and a washing machine by 3 workers in one day. In the United States, an automobile can be produced by 6 workers in one day, and a washing machine by 2 workers in one day. A) Which country has an absolute advantage in the production of automobiles and in washing machines? B) Which country has a comparative advantage in the production of washing machines and in automobiles? C) Which pattern of specialization results in the greatest gains from trade between the two countries?
The united states has an absolute advantage in the production or automobiles and an advantage in washing machines. Italy has a comparative advantage in automobiles . this mean that Italy should specialize in washing machines and the united states in automobiles. Kodi has the absolute advantage in cutting down coconuts and the absolute advantage in catching fish.