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Vietnam employs 40 million tons of rice a year. World price os rice is $500 per ton. Vietnam employs 10 million people in rice production with each working an average of 1000 hours a year.
California produces 2 million tons of rice a year. There are 100,000 workers in the California rice industry and they work 1000 hours a year.
1) Which economy, California or Vietnam, has an absolute advantage in rice production?
2) Which economy has a comparative advantage in rice production?
3) What is the wage for rice workers in the two economies? Is it the same? Why or why not?
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