(a) Discuss what international trade is and four (4) ways it affects small open economies? (b) The following table illustrates the maximum output in the production of Lumber and Wheat for USA and Guyana; assume that only one good is being produced. USA Guyana Wheat Lumber Lumber =0, Wheat = 900 Lumber =300, Wheat = 0 Lumber = 0, Wheat = 1000 Lumber=200, Wheat = 0 i. ii. iii. Which country has the absolute advantage in wheat production? Which country has the absolute advantage in Lumber production? | What is the opportunity cost of one more unit of Lumber in Country A? |
(a) Discuss what international trade is and four (4) ways it affects small open economies? (b) The following table illustrates the maximum output in the production of Lumber and Wheat for USA and Guyana; assume that only one good is being produced. USA Guyana Wheat Lumber Lumber =0, Wheat = 900 Lumber =300, Wheat = 0 Lumber = 0, Wheat = 1000 Lumber=200, Wheat = 0 i. ii. iii. Which country has the absolute advantage in wheat production? Which country has the absolute advantage in Lumber production? | What is the opportunity cost of one more unit of Lumber in Country A? |
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please assist with question a and b i, ii and iii.
Transcribed Image Text:(a) Discuss what international trade is and four (4) ways it affects small open economies?
(b) The following table illustrates the maximum output in the production of Lumber and Wheat
for USA and Guyana; assume that only one good is being produced.
USA
Guyana
Wheat
Lumber
Lumber =0, Wheat = 900
Lumber =300, Wheat = 0
Lumber 0, Wheat = 1000
Lumber =200, Wheat = 0
i.
ii.
iii.
iv.
V.
vi.
vii.
Which country has the absolute advantage in wheat production?
Which country has the absolute advantage in Lumber production? |
What is the opportunity cost of one more unit of Lumber in Country A? |
What is the opportunity cost of one more unit of Lumber in Country B ?
What country has the comparative advantage in Wheat production?|
What country has the comparative advantage in Lumber production? |
What is the acceptable term of trade for which both countries will gain from trade?!
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Step 1: Introduce the concept of absolute advantage.
VIEWStep 2: (a) Discuss what international trade is and four ways it affects small open economies.
VIEWStep 3: b) i) Determine which country has the absolute advantage in wheat production.
VIEWStep 4: b) ii) Determine which country has the absolute advantage in Lumber production.
VIEWStep 5: c) Determine the opportunity cost of one unit of Lumber in Country A (USA).
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