Question

Utilizing $10 dollars of inputs Spain could produce $20 worth of wine or $30 worth of Beer.

Utilizing $10 dollars of inputs France could produce $50 worth of wine or $50 worth of Beer.

		Spain has comparative advantage in both beer and wine
		France has comparative advantage in both beer and wind
		France has absolute advantage and comparative advantage in beer
		France has absolute advantage and comparative advantage in wine

Answer 1

Option 4

Spain opportunity costs

1 Beer = 20/30=0.67 wine

1 wine = 30/20=1.5 beer

France opportunity costs

1 Beer = 50/50=1 Wine

1 Wine =50/50=1 Beer

So, France has comparative and absolute advantage in wine as it has forgo lesser beer.