4 Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter aircraft. The tale below shows output rates per day in the two countries if all resources are fully and efficiently employed. Use this information to answer Question (a), (b) and (c). Carpets Fighter aircraft Afghanistan 100 4 US 500 25 a) Based on this information: А. there is no opportunity for mutually beneficial trade between the two countries. Afghanistan has an absolute advantage in the production of both goods. Afghanistan should import carpets from the US. В. С. D. Afghanistan has a comparative advantage in the production of aircraft. Е. the US should export fighter aircraft to Afghanistan. b) An appropriate international exchange ratio that would allow mutually advantageous trade to take place would be: 1 aircraft = 25 carpets. 1 aircraft = 20 carpets. 1 carpet = 4 aircraft. 1 carpet = 0,04 aircraft. 1 aircraft = 22 carpets. А. В. С. D. Е.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
Section: Chapter Questions
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Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter
aircraft. The tale below shows output rates per day in the two countries if all resources are fully
and efficiently employed. Use this information to answer Question (a), (b) and (c).
Carpets
Fighter aircraft
Afghanistan
100
4
US
500
25
a)
Based on this information:
А.
there is no opportunity for mutually beneficial trade between the two countries.
В.
Afghanistan has an absolute advantage in the production of both goods.
C.
Afghanistan should import carpets from the US.
D.
Afghanistan has a comparative advantage in the production of aircraft.
Е.
the US should export fighter aircraft to Afghanistan.
b)
An appropriate international exchange ratio that would allow mutually advantageous trade to
take place would be:
1 aircraft = 25 carpets.
1 aircraft = 20 carpets.
1 carpet = 4 aircraft.
1 carpet = 0,04 aircraft.
1 aircraft = 22 carpets.
А.
В.
C.
D.
Е.
Transcribed Image Text:Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter aircraft. The tale below shows output rates per day in the two countries if all resources are fully and efficiently employed. Use this information to answer Question (a), (b) and (c). Carpets Fighter aircraft Afghanistan 100 4 US 500 25 a) Based on this information: А. there is no opportunity for mutually beneficial trade between the two countries. В. Afghanistan has an absolute advantage in the production of both goods. C. Afghanistan should import carpets from the US. D. Afghanistan has a comparative advantage in the production of aircraft. Е. the US should export fighter aircraft to Afghanistan. b) An appropriate international exchange ratio that would allow mutually advantageous trade to take place would be: 1 aircraft = 25 carpets. 1 aircraft = 20 carpets. 1 carpet = 4 aircraft. 1 carpet = 0,04 aircraft. 1 aircraft = 22 carpets. А. В. C. D. Е.
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