Country A has great expertise in the production of planes and produces a large quantity of...
Country A has great expertise in the production of planes and produces a large quantity of planes while country B has expertise in the production of automobiles and produces large quantities of cars. When the two countries trade planes for automobiles
both countries improve allocative efficiency because they can now consume a more desirable combination of goods and services (planes and cars) through trade.
only country B benefits because through trade they can acquire planes that are more valuable than automobiles.
Homework Answers
It has been stated that the country A has great expertise in the production of planes.
This implies that the country A has the comparative advantage in the production of planes.
Moreover, it has been stated that the country B has great expertise in the production of automobiles.
This implies that the country B has the comparative advantage in the production of automobiles.
When two countries have comparative advantage in the production of two separate goods and then trade with each other then both countries gain.
Their gain is in terms of improvement in allocative efficiency they experience which enables them to consume a more desirable combination of goods and services through trade.
Hence, the correct answer is the option (1).
Add Answer to:
Country A has great expertise in the production of planes and
produces a large quantity of...
The country of Zanabar produces computers and produces them in a large quantity while the country...
The country of Zanabar produces computers and produces them in a large quantity while the country of Abathana expertly produces cell phones in large quantities. In order for both countries to consume more desirable combinations of goods and services (computers and cell phones) they should O allow only Abathana to trade a small quantity of cell phones for computers since cell phones are worth more O trade until each country has exactly equal number of cell phones and computers which...
Consider two countries, A and B. Each country produces only two goods with 1,000 production units:...
Consider two countries, A and B. Each country produces only two goods with 1,000 production units: Wine and Cheese. Country A can produce 400 bottles of wine or 200 pounds of cheese or any combination of two goods. At the same time, country B can produce 1200 bottles of wine or 300 pounds of cheese or any combination of two goods. Suppose that both countries maximize their utility when they consume wine and cheese in equal proportions. 1. a) Absolute...
Use the Production Possibility frontier model in this question. A country produces 2 products: coffee and...
Use the Production Possibility frontier model in this question. A country produces 2 products: coffee and other stuff. Show how this country can consume more other stuff than it produces. In your answer identify imports, exports, and terms of trade.
The U.S. government restricting the quantity of sugar imports into the country is an example of...
The U.S. government restricting the quantity of sugar imports into the country is an example of a(n): trade settlement. trade quota. market hanger. embargo. The key industries argument for trade restrictions relies on the notion that: war may disrupt trade flows. some industries deserve protection because they provide positive spillover effects to the rest of the economy. products with inelastic supply are the major source for job creation. economies of scale are easier to achieve in exporting industries. Which of...
Answer Bank Through specialization and trade, it is possible for a country to consume a combination...
Answer Bank Through specialization and trade, it is possible for a country to consume a combination of goods that is beyond its original production possibilities frontier. Countries trade for goods in which they do not have a comparative advantage. and therefore, would never trade with nations that have similar resource endowments. When two countries choose to partake in international trade, it is a mutually beneficial activity for both countries. Wealthier countries always benefit more from international trade than poorer countries....
Ricardo’s theory of trade suggests that it makes sense for a country to specialize in the production of those products that it produces most efficiently and to buy the products that it produces less efficiently from oth
Ricardo’s theory of trade suggests that it makes sense for a country to specialize in the production of those products that it produces most efficiently and to buy the products that it produces less efficiently from other countries, even if this means that the country is buying products that in reality, it could produce more efficiently itself. This means that Ricardo showed that a country can derive advantages by trade even though it has an absolute advantage in producing all products. The Heckscher-Ohlin theory of ...
Ricardo’s theory of trade suggests that it makes sense for a country to specialize in the production of those products that it produces most efficiently and to buy the products that it produces less efficiently from oth
Ricardo’s theory of trade suggests that it makes sense for a country to specialize in the production of those products that it produces most efficiently and to buy the products that it produces less efficiently from other countries, even if this means that the country is buying products that in reality, it could produce more efficiently itself. This means that Ricardo showed that a country can derive advantages by trade even though it has an absolute advantage in producing all products. The Heckscher-Ohlin theory of ...
Calculate the gains from trade-that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in
3. Gains from trade Consider two neighboring island countries called Euphoria and Arcadia. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Initially, suppose Arcadia uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Euphoria uses 3...
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor...
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor and Capital. All consumers at Home have preferences over two goods that can be represented by the utility function U(X,) =XY . The factor requirements per unit of output of the two goods are also fixed and they are shown in the following table: Good X Good Y Labour 1/3 2/3 Capital 2/3 1/3 Home country has 360 units of Labour and 600 units...
Q 1: Clancy and Eileen are farmers. Each one owns a 20-acre plotof land. The...
Q 1: Clancy and Eileen are farmers. Each one owns a 20-acre plot
of land. The following table shows the amount of corn and rye each
farmer can produce per year on a given acre. Each farmer chooses
whether to devote all acres to producing corn or rye or to produce
corn on some of the land and rye on the rest.CornRye(Bushels per acre)(Bushels per acre)Clancy205Eileen5010On the following graph, use the blue line (circle symbol) to
plot Clancy's production possibilities...
The country of Zanabar produces computers and produces them in a large quantity while the country of Abathana expertly produces cell phones in large quantities. In order for both countries to consume more desirable combinations of goods and services (computers and cell phones) they should O allow only Abathana to trade a small quantity of cell phones for computers since cell phones are worth more O trade until each country has exactly equal number of cell phones and computers which...
Answer Bank Through specialization and trade, it is possible for a country to consume a combination of goods that is beyond its original production possibilities frontier. Countries trade for goods in which they do not have a comparative advantage. and therefore, would never trade with nations that have similar resource endowments. When two countries choose to partake in international trade, it is a mutually beneficial activity for both countries. Wealthier countries always benefit more from international trade than poorer countries....
Q 1: Clancy and Eileen are farmers. Each one owns a 20-acre plot
of land. The following table shows the amount of corn and rye each
farmer can produce per year on a given acre. Each farmer chooses
whether to devote all acres to producing corn or rye or to produce
corn on some of the land and rye on the rest.CornRye(Bushels per acre)(Bushels per acre)Clancy205Eileen5010On the following graph, use the blue line (circle symbol) to
plot Clancy's production possibilities...
Most questions answered within 3 hours.
-
Write the overall reaction for the RedOx
reaction (below) when it occurs in an acidic environment....
asked 27 seconds ago -
Two forces are acting on an object. Force 1 on the object is 6.0
N and...
asked 1 minute ago -
You are planning for retirement. You plan to work for 20 years.
Starting a year from...
asked 14 minutes ago -
The African Adventures exhibit water system holds approximately
850,000 gallons (3.2x109 g) of water. The temperature...
asked 6 minutes ago -
which of the following is capital?
the barn a farmer uses to hold the chickens he...
asked 16 minutes ago -
Attribute
Sample Value
Sample Value
Sample Value
Sample Value
pirate_num
11
22
43
54
pirate_lname
James...
asked 9 minutes ago -
10. Two forces act on a 3 kg object, the gravitational force and
a second, constant...
asked 26 minutes ago -
Dividing Partnership Net Loss
Leigh Meadows and Byron Leef formed a partnership in which the
partnership...
asked 23 minutes ago -
Discuss how Entrepreneurial leadership style differs
from traditional leadership?
asked 49 minutes ago -
A futuristic design for a car is to have a large solid
disk-shaped flywheel within the...
asked 47 minutes ago -
Solid NaOH is added to a solution of 0.50 M acetic acid until
the pH of...
asked 50 minutes ago -
Which of the following statements is not a characteristic of the
Internal Revenue Code?
A) The...
asked 58 minutes ago