Group+2+Comparative+Advantage

**//Week 1: The Gains from Trade//**
Belgium has 15,000 hours of labor with which it can produce either cheese or watches. It takes 15 hours to produce a pound of cheese, and 30 hours to produce a watch.
 * 1) Graph Belgium's production possibility frontier (PPF), with the quantity of cheese on the vertical axis
 * 2) What is the opportunity cost of producing a watch (in terms of pounds of cheese) in Belgium?
 * 3) Now assume that Spain can also produce cheese and watches with its 15,000 hours of labor. However, in Spain it takes 20 hours to produce a pound of cheese and 30 hours to produce a watch. Graph Spain's PPF. What is the opportunity cost of producing watches in Spain?
 * 4) Which country has the absolute advantage in producing watches? Which country has the absolute advantage in producing cheese? Explain your answer.
 * 5) Should these two countries trade? Why or why not? If they should trade, which product should Belgium specialize in, and why?

(Jonathan)