Homestead Crafts,a distributor of homemade gifts,operates out of owner Emma Finn’s house. How many units should Emma include in
her company’s period - end inventory?
1 answer:
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Answer: Greece; Sweden
Explanation:
A country or a firm has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodity is lower in that country or firm as compared to the other country or firm.
Greece's opportunity cost of producing a pane of stained glass = 4 barrels of oil
Sweden's opportunity cost of producing a pane of stained glass = 8 barrels of oil
Therefore, opportunity cost of producing a pane of stained glass is lower in Greece as compared to the Sweden.
Hence, Greece has a comparative advantage in producing stained glass.
Greece's opportunity cost of producing a barrel of oil =
= 0.25 pane of stained glass
Sweden's opportunity cost of producing a barrel of oil =
= 0.125 pane of Stained glass
Therefore, opportunity cost of producing a barrel of oil is lower in Sweden as compared to the Greece.
Hence, Sweden has a comparative advantage in producing Oil.