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marshall27 [118]
3 years ago
9

The basis of trade

Business
1 answer:
maks197457 [2]3 years ago
6 0

Answer:

• Italy has a comparative advantage in the production of wine.

• Spain has a comparative advantage in the production of cheese.

Explanation:

Comparative advantage is when a particular economy has a lower opportunity cost when it produces goods and seevices than its trading partners.

For Italy, the country forgoes the production of 2 pounds of cheese when it produces a bottle of wine while Spain forgoes 4 pounds of cheese.

The above statement simply means that Italy has a comparative advantage in the production of wine and Spain has a comparative advantage in the production of cheese.

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