Question

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 comparsative advantage in producing lumberjack boots. The United States has a comparative advantage in producing lumberjack shirts 26 44PPF.s Does either country have an absolute advantage in producing both goods? A Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts 16- US OB Both countries have an absolute advantage in both goods because they both produce boots and shirts. vanage in both goods becauseit can produa nore shirts nore boots On c OE. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more PFFCanada shirts 2 4 & 4 1012 1418 1020 2224 2028 3032 3438 3840 Quantity of boots made Suppose initially that the United States is consuming 2 boots and 12 shirts and Canada is consuming 12 boots and 4 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 comparativee advantage and then trade In particular, sucpose the United States trades Canada half of ts production for half of what Canada oroduces. The United States will have integer) and additional shirt(s) after the trade (enter a numeric response using additional boots) additional boot(s) At the same time, Canada will be able to consume additional shirt(s) as a result of the trade and

Answer 1

preduce the Us will trode 12umits f Shirts ar 12 units Joad they Specetize NiU Canana 0 addrional Hence Snaes for 12 Shirke Ard Canada & 8 additimal Shirts Shiyt but hove additioml Shoes rave 6 additional shoes