0:00
Hello.
00:03
Let's first look at the absolute advantage.
00:09
It's easier absolute advantage.
00:13
It's simple we compare production levels in both countries.
00:19
So absolute advantage in cars.
00:28
If we compare how many cars are produced by both countries per day, we can see that sweden produces more cars.
00:40
So sweden has an absolute advantage in producing cars because 800 is greater than 600.
00:53
And similarly we can find an absolute advantage in producing clocks.
01:01
If we compare two numbers, we can see that italy can produce much more twice more clocks per day so italy has an absolute advantage in clocks okay now let's find the comparative advantage for doing this we need to find opportunity costs of producing both cars and clocks let's start with opportunity cars for italy the opportunity cost of producing one car is is the ratio of 200 clocks over 600 cars it's 3 .33 clocks so when italy produces one cars per day it's sacrifice 3 .33 clocks the same day.
02:17
So this is for italy.
02:20
What about sweden? opportunity course of producing cars in sweden is the fraction the ratio of 1000 over 800.
02:34
It's 1 .25.
02:39
This is for sweden...