Poland requires 12 workers, and shifting those 12 workers away from television production has an

opportunity cost of two television sets. Thus, the opportunity cost of producing video cameras is lower

in Germany, and video cameras will be Germany’s comparative advantage.

d.

In this example, absolute advantage differs from comparative advantage. Germany has the absolute

advantage in the production of both goods, but Poland has a comparative advantage in the production

of televisions.

e. Germany should specialize, at least to some extent, in the production of video cameras, export video

cameras, and import televisions. Conversely, Poland should specialize, at least to some extent, in the

production of televisions, export televisions, and import video cameras.

5. There are a number of possible advantages of intra-industry trade. Both nations can take advantage of

extreme specialization and learning in certain kinds of cars with certain traits, like gas-efficient cars,
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