Suppose That the Productivity Per Worker in the Milk and Cranberry

question 165

Essay

Suppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows: $\begin{array}{c}\underline{\text { Output in Thousands of Litres }}\\\begin{array}{lll}\\\\\text {Northland}\\\text {Southland} \end{array}\begin{array}{c}\\\underline{\text { Milk }} \\6\\2\end{array}\begin{array}{lll}\\\\\text { or }\\\text { or } \end{array}\begin{array}{c}\\\underline{\text { Cranberry Juice}}\\3\\1\end{array}\end{array}$

a) Which country has the absolute advantage in producing milk?
b) Which country has the absolute advantage in producing cranberry juice?
c) Which country has the comparative advantage in producing milk?
d) Which country has the comparative advantage in producing cranberry juice?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

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Definitions:

Pharynx

The muscular tube that connects the mouth and nasal cavity to the larynx and esophagus, serving both the respiratory and digestive systems.

Primary Bronchi

The major air passages that branch off from the trachea and enter the lungs to facilitate breathing.

Voice Box

The part of the air passage to the lungs that holds the vocal cords; it is responsible for producing sound.

Larynx

The voice box located in the throat, involved in breathing, producing sound, and protecting the trachea against food aspiration.