1. Production of Burek & Red Wine
Mile Grbavac
Zagreb School of Economics & Management
Business Mathematics & Economics

2. The Problem
As the modern world begins to globalize, many countries are beginning to produce goods that are both more efficient (based on exogenous variables) and economically viable. Then certain countries that specialize in the production of one good can trade on the open market. The problem arises in when a country has to determine what product it needs to produce efficiently. In our case, Croatia and Bosnia i Hercegovina both produce Burek and Red Wine, however we need to determine which country is more efficient at producing which product.
grapes

3. Macroeconomics
A branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole rather than individual markets. This includes national, regional, and global economies. Along with microeconomics, macroeconomics is one of the two most general fields in economics. there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income).

4. Data Before Specialization Production Per hour worked Total Output
Countries
Croatia
Bosnia i Hercegovina
Burek (Kg)
3 Kg/h
9 Kg/h
12 Kg/h
Red Wine (L)
6 L/h
2 L/h
8 L/h
Before Country Specialization, each country was producing both Burek and Red Wine, while this system works, countries producing all the goods that it consumes tend to not trade with other countries. There must be a way to maximize efficiency.
We can see that Croatia is 300% more efficient at producing Red Wine than BiH. On the other hand, BiH is 300% more efficient at producing Burek than Croatia. So we can see that there is some inefficiency in the system.

5. Wolfram Alpha
Production of Croatia
Production of BiH

6. Wolfram Alpha

7. Data After Specialization Production Per hour worked Total Output
Countries
Croatia
Bosnia i Hercegovina
Burek (Kg) -
18 Kg/h
Red Wine (L)
12 L/h
If Croatia were to allocate more resources towards the production of Red Wine, every unit of Burek production that Croatia stops producing will increase the production of Red Wine by 2L/h or 33%.
If BiH were to allocate more resources towards the production of Burek, every unit of Red Wine production that BiH stops producing will increase the production of Burek by 4.5Kg/h or 50%.

8. Wolfram Alpha

9. The Resulting Trade After Trading Quantity of Per hour worked
Total Output
Countries
Croatia
Bosnia I Hercegovina
Burek (Kg)
9 Kg
18 Kg
Red Wine (L)
6 L
12 L
After each country has traded goods for the ones demanded by their respective economies. They have attained more of that product than what was previously achieved when both countries produced both goods. We have attained maximum efficiency in this system.
After Country Specialization, each country is producing whichever product they attain a higher yield from with one hour of production. Countries producing only certain goods tend to trade with other countries that have the other goods their economies demand.

10. Closing Thoughts
With every country beginning to specialize in a particular product, they can not only produce more, but have more to bring to the open market, which boosts the domestic economy in exports. In economics, this is called Absolute Advantage.
Basically, Absolute Advantage gives one country the ability to produce goods at a lower production cost than other countries.