Which country has the absolute advantage in making chocolate

Reference no: EM133611671

Assignment:

1. Belgium and Germany both make beer and chocolate. In Belgium, it takes 4 hours of labor to make a case of beer and 6 hours of labor to make a box of chocolate. In Germany, it takes 2 hours of labor to make a case of beer and 5 hours of labor to make a box of chocolate. Please explain all answers. Each part has 6 points. Which country has the absolute advantage in making chocolate and which one in making beer? What is the autarky relative price of chocolate in each country? Which country has the comparative advantage in making chocolate and which one in making beer? What happens to the real wage in Belgium when it opens up to trade with Germany and the relative price of chocolate is PCHOC/PBEER = 2?

Reference no: EM133611671

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