Cloth WidgetsHome1020Foreign6030Page <25. Given the information of the units of labor required to produce one unit of each good (notMPL) in the table aboveA. Home has a comparative advantage in cloth.B. neither country has a comparative advantage in cloth.C. Foreign has an absolute advantage in both cloth and widgets.D. Foreign has a comparative advantage in cloth.6. From the four prices below, what could be the relative price of cloth to widget if tradehappens?A. 1/6B. 1/3C. 1/3D. 5/27. Suppose that the relative price of cloth to widgets is 1. What is the ratio of real wage inHome to Foreign when trade happens?A. I1) 108. According to the Ricardian model, the consumption possibility frontierhp

Comparative advantage describes the idea of comparing how much it costs in terms of what could have…

A. Home has a comparative advantage in cloth. B. neither country has a comparative advantage in cloth. C. Foreign has an absolute advantage in both cloth and widgets. D. Foreign has a comparative advantage in cloth.

A. Home has a comparative advantage in cloth. B. neither country has a comparative advantage in cloth. C. Foreign has an absolute advantage in both cloth and widgets. D. Foreign has a comparative advantage in cloth.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage: Suppose that the United States and Switzerland produce bicycles and chocolate bars: Bicycles per worker/year Chocolate Bars per worker/year 10,000 20,000 Switzerland 1 United States 5 a. The United States has an absolute advantage in both bicycles and chocolate bars, but which country has a comparative advantage producing bicycles? Chocolate bars? b. Assume there are 10,000 workers. Draw the production possibilities frontier for the United States prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on the U.S. production possibilities frontier (put bicycles on the x-axis and millions of chocolate bars on the y-axis). c. Assume there are 10,000 workers. Draw the production possibilities frontier for Switzerland prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on Switzerland's…
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