Absolute and Comparative Advantage

Critical Thinking Questions

1. Are differences in geography behind the differences in absolute advantages?
2. Why does the United States not have an absolute advantage in coffee?
3. Look at Self-Check Question 3. Compute the opportunity costs of producing sweaters and wine in both France and Tunisia. Who has the lowest opportunity cost of producing sweaters and who has the lowest opportunity cost of producing wine? Explain what it means to have a lower opportunity cost.