Suppose that in Germany computers cost $1,500 and automobiles cost $20,000, and in the U.S. computers...
Suppose that in Germany computers cost $1,500 and automobiles cost $20,000, and in the U.S. computers cost $1,000 and automobiles cost $15,000. Which of the following is not correct? 1. the U.S. has an absolute advantage in both computers and automobiles 2. all of the other answers are correct 3. Germany has a comparative advantage in automobiles 4. the U.S. will not gain if it trades with Germany 5. the U.S. has a comparative advantage in computers
Homework Answers
Ans is 4.
both nations benefits after trading
Opportunity cost of computer in Germany=1500/2000=0.75automobiles
opportunity cost of computer in U.S.=1000/1500=0.667automobiles
thus US has comparative advantage in Computers and Germany in automobiles
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Suppose that in Germany computers cost $1,500 and automobiles
cost $20,000, and in the U.S. computers...
Suppose that in Germany computers cost 1,500 and automoviles cost 20,000, and uin the US computers...
Suppose that in Germany computers cost 1,500 and automoviles cost 20,000, and uin the US computers cost 1,000, and automoviles cost 15,000, which of the following is not correct. a. the us has an aboslute advantage in the both computers and autos b. the us will thst gain if it trades with Germany
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