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Explain how absolute advantage differs from comparative advantage. (4 marks)
2. Sarah and her boyfriend Mike want to save some money to pay for their wedding. So they decided to help people in the neighborhood by cleaning their garages and mowing lawns. Sarah takes 60 minutes to clean a garage and 80 minutes to mow a lawn. Mike takes 80 minutes to clean a garage and 80 minutes to mow a lawn. Sarah and Mike devote 10 hours per week each to these activities and get paid $25 for each...
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Antigua has a comparative advantage in the production of towels and Barbuda has a comparative advantage in the production of umbrellas. neither good and Barbuda has a comparative advantage in the production of both goods. umbrellas and Barbuda has a comparative advantage in the production of towels. both goods and Barbuda has a comparative advantage in the production of neither good.
4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Sylvania. Both countries produce grain and tea, each initially (i.e., before specialization and trade) producing 24 million pounds of...
In Ricardo's theory of comparative advantage, the main source of comparative advantage is: 1. the labor-intensity of production 2. resource supplies 3. the capital-intensity of production 4. technology 5. human capital
In Ricardo's theory of comparative advantage, the main source of comparative advantage is: 1. resource supplies 2. human capital 3. technology 4. the capital-intensity of production 5. the labor-intensity of production
What are comparative and absolute advantage? Why is comparative advantage, in your opinion, relevant for international trade?
Explain the comparative advantage and trade. Discuss the principle of increasing opportunity costs. Explain how and what causes the production possibilities curve to shift. Compare and contrast between labor and other factors of production. Explain how economies gain from trade.