Homework Answers
The answer is theory of absolute advantage.
It states that if a country can produce a product at a low price where it holds specialization then it will have absolute advantage over other country, the same can be true of another country. In this scenario, both these countries can exchange their products with one another in a free trade.
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Question 1 2 pts Each country should produce the product that it specializes in, and each...
(a) In which product does country H have the absolute advantage over country F? According to...
(a) In which product does country H have the absolute advantage
over country F? According
to Smith’s theory, which product should country H export? In
which product does
country H have the comparative advantage over country F?
According to Ricardo’s theory,
which product should country H export?
(b) Specify the production possibility curve (PPC) in country H.
Calculate the production
and consumption allocation of country H in the no-trade case.
Take fruits as the unit of account.
How much is...
1. Suppose country A can produce 30 units of Corn per time period (if it specializes...
1. Suppose country A can produce 30 units of Corn per time period (if it specializes in Corn). Country A can produce 4 outfits per time period (if it specializes in outfits). If country B specializes in Corn, it can produce 40 units per time period. If country B specialized in Outfits, it can produce 3 outfits per time period. A has a comparative advantage in Corn. B has a comparative advantage in Outfits. neither country has a comparative advantage....
ANSWER A, B, C, D & E. (a) In which product does country H have the...
ANSWER A, B, C, D & E.
(a) In which product does country H have the
absolute advantage over country F? According
to Smith’s theory, which product should country H export? In
which product does
country H have the comparative advantage over country F?
According to Ricardo’s theory,
which product should country H export?
(b) Specify the production possibility curve
(PPC) in country H. Calculate the production
and consumption allocation of country H in the no-trade case.
Take fruits as...
Consider two identical countries, country A and country B, that both produce shampoo, a good characterized...
Consider two identical countries, country A and country B, that both produce shampoo, a good characterized by product differentiation, with identical increasing returns to scale technology. Each variety of shampoo is produced by a different firm, so the market exhibits all the characteristics of the monopolistic competition model of trade. 1. In the free trade, describe the gains from trade in country A and country B. How are the gains from trade different from trade based on comparative advantage? 2....
1) Calculate the opportunity costs of production for each county County D gives up ___ chairs(s) for each c...
1) Calculate the opportunity costs of
production for each county
County D gives up ___ chairs(s) for each clay pot produced
County D gives up _____ clay pot(s) for each chair produced
County H gives up ___ chairs(s) for each clay pot produced
County H gives up _____ clay pot(s) for each chair produced
2)
Define the concept of absolute advantage:
Define the concept of Comparative advantage
3) Fill in the blanks to show how each country above...
When a country specializes in the production of a good, this means that it can produce...
When a country specializes in the production of a good, this
means that it can produce this good at a lower opportunity cost
than its trading partner. Because of this comparative advantage,
both countries benefit when they specialize and trade with each
other.
The following graphs show the production possibilities frontiers
(PPFs) for Candonia and Lamponia. Both countries produce lemons and
tea, each initially (i.e., before specialization and trade)
producing 6 million pounds of lemons and 3 million pounds of...
Consider two identical countries, country A and country B, that both produce shampoo, a good characterized...
Consider two identical countries, country A and country B, that both produce shampoo, a good characterized by product differentiation, with identical increasing returns to scale technology. Each variety of shampoo is produced by a different firm, so the market exhibits all the characteristics of the monopolistic competition model of trade. 1)If country A and country B trade, what type of trade would be more likely to occur: intra industry or inter industry? WHY? 2)If two countries are allowed to trade...
The country of Uncoordinated requires 5 units of labor to produce one unit of corn and...
The country of Uncoordinated requires 5 units of labor to produce one unit of corn and 10 units of labor to produce one unit of housing. Uncoordinated has 100 total units of labor available. Uncoordinated has Leontief preferences (right-angle indifference curves) with the bend at equal shares of housing and corn.The country of Gifted requires 1 unit of labor to produce one unit of corn and 1 unit of labor to produce one unit of housing. Gifted has 10 units...
Question 49 1 pts Assume a country is running a trade deficit. According to economic theory...
Question 49 1 pts Assume a country is running a trade deficit. According to economic theory how would a depreciation of that country's currency affect its (negative) trade balance? o it would become more negative O it would almost instantly become positive o there would be no impact because exchange rates & trade balance are unrelated o it would become less negative
1) True 2) False 7. Specialization and trade When a country specializes in the production of...
1) True
2) False
7. Specialization and trade When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce grain and tea, each initially i.e., before specialization and trade) producing 24 million...
(a) In which product does country H have the absolute advantage
over country F? According
to Smith’s theory, which product should country H export? In
which product does
country H have the comparative advantage over country F?
According to Ricardo’s theory,
which product should country H export?
(b) Specify the production possibility curve (PPC) in country H.
Calculate the production
and consumption allocation of country H in the no-trade case.
Take fruits as the unit of account.
How much is...
ANSWER A, B, C, D & E.
(a) In which product does country H have the
absolute advantage over country F? According
to Smith’s theory, which product should country H export? In
which product does
country H have the comparative advantage over country F?
According to Ricardo’s theory,
which product should country H export?
(b) Specify the production possibility curve
(PPC) in country H. Calculate the production
and consumption allocation of country H in the no-trade case.
Take fruits as...
1) Calculate the opportunity costs of
production for each county
County D gives up ___ chairs(s) for each clay pot produced
County D gives up _____ clay pot(s) for each chair produced
County H gives up ___ chairs(s) for each clay pot produced
County H gives up _____ clay pot(s) for each chair produced
2)
Define the concept of absolute advantage:
Define the concept of Comparative advantage
3) Fill in the blanks to show how each country above...
When a country specializes in the production of a good, this
means that it can produce this good at a lower opportunity cost
than its trading partner. Because of this comparative advantage,
both countries benefit when they specialize and trade with each
other.
The following graphs show the production possibilities frontiers
(PPFs) for Candonia and Lamponia. Both countries produce lemons and
tea, each initially (i.e., before specialization and trade)
producing 6 million pounds of lemons and 3 million pounds of...
Question 49 1 pts Assume a country is running a trade deficit. According to economic theory how would a depreciation of that country's currency affect its (negative) trade balance? o it would become more negative O it would almost instantly become positive o there would be no impact because exchange rates & trade balance are unrelated o it would become less negative
1) True
2) False
7. Specialization and trade When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce grain and tea, each initially i.e., before specialization and trade) producing 24 million...
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