Question

Suppose initially that the United States is consuming 2 boots and 18 shirts and Canada is consuming 12 boots and 2 shirts, as indicated in the figure. ​ Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In​ particular, suppose the United States trades Canada half of its production for half of what Canada produces.?
Using the same amount of resources, the United States and Canada can both produce lumberjack shirts and lumberjack boots, as shown in the production possibilities frontiers in the figure to the right. Canada has a comparative advantage in producing lumberjack boots PPF The United States has a comparative advantage in producing lumberjack shiris. Does either country have an absolute advantage in producing both goods? Quantity of shirts made A Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts B. The United States has an absolute advantage in both goods because it can produce more boots and more shiits. OC. Both countries have an absolute advantage in both goods because they both produce boots and shirts. OD. Neither country has an absolute advantage in both goods because the United Slales can produce more bools bul Canada can produce more shirts. O E, Canada has an absolute advantage in both goods because it can produce more boots and more shirts . C PP Fearoa IN 2 4 6 8 1012-418192022 2428 28303234.239 40 Quantity of boots made Suppose initially that the Uniled Slales is consurning 2 bools and 18 shirts and Canada is consuming 12 bools and 2 shirls. as indicated in the figure. Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative acvantage and then trade. In particular, suppose the United States trados Canada half of its production for half of what Canada produces. The United States will have 18 additional shirts) after the trade (enter a numeric response using an integer)

Answer 1

Ans

Ans I country Boots T Shirsts] US 2 - 2/19=144) 18 - 12/21 Canada ( 12 ) = (8) 2 = ( 2 ) - 110 In the bracketge number shows comparative advantage." Neither country has an absolute advantage in both the goods because canada can produce more boots but the us can produce more shirt. As we can see in the bore us has Comparative advantage absolute advantage in producing shirts only because Us can produce 18 with shirts and only 2 boots. so us will specialize in the production of shirts only. As we can see in the bou Canada has absolute advantage in producing boots only because canada can produce 12 unit of boots and only 2 units of shirts in a given time so canada will specialia in the production of boots only.