Question

9. Comparative advantage and import competition Romania recently joined the European Union (EU) and faces intense import competition from other EU members, such as Italy. Suppose you have the following data on labor productivity for footwear and beef production in Romania and Italy. Assume that footwear and beef production are measured in constant dollars reflecting the value of the products. Use the Ricardian model to analyze possible effects on each country's footwear and beef industries when answering the questions that follow Sales per Employee Footwear Beef Country (Dollars per year) Dollars per year) Romania 40,000 20,000 Italy 80,000 32,000 The table suggests that Italy has an absolute advantage over Romania in and a comparative advantage in The table suggests that wages in Italy are in Romania As a result of Romania's joining the EU, employment in Romania is likely to fa True or False: The degree of openness of the Romanian economy will influence the mix of jobs True False

Answer 1

The table suggest that italy has absolute advantage over Romania in footwear and comparative advantage in beef.

Thetable suggests that wages in italy are MORE than in romania

True

As the domestic producers adjusts their production and production choices  according to the amount of goods being imported.