The country with the lower cost has the comparative advantage and will specialize in that product. This means [Republic Of Trade or Econ Land] specializes in making computers, and [Republic Of Trade or Econ Land] grows corn.Without trade both countries produce both products: Econ Land grows 100 bushels of corn and makes 50 computers in an hour, and the Republic of Trade grows 80 bushels of corn and makes 220 computers in an hour. Show that if they specialize and trade 70 computers in exchange for 90 bushels of corn, they end up with more of both products. Econ Land is trading corn in exchange for computers with the Republic of Trade now (you might remember they were working with wheat and cars before). Let's seeif they can benefit from working with each other, from both an economic and environmental perspective.Start by filling in the table below.Econ LandRepublic of TradeCorn200 bushels/hour300 bushels/hourComputers100/hour300/hourTo grow a bushel of corn[ Select ][ Select ]costs them...computerscomputersTo make a computer costs[ Select ]Select ]them...bushels of cornbushels of corn

The transfer of services and goods that takes place between individuals or entities being done in exchange for money is known as trade. The table is as follows: Eco land Republic of Trade Bushel of corn =100/200=0.5 computers =300/300=1 computers Computer =200/100=2 =300/300=1 It could be observed that: Eco land has a comparative advantage in bushels of corn and the Republic of Trade has a comparative advantage in a computer. Eco Land would be producing 200 bushels of corn while the Republic of Trade would be producing 300 computers in an hour. When they specialize and 70 computers are traded in exchange for 90 bushels of corn, Eco land would gain: =(200-90)-100=10 bushel of corn and 70 computers Republic of trade would gain: =(300-70)-220=10 computers and 90 bushels of corn.

Answered: Econ Land is trading corn in exchange…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The country with the lower cost has the comparative advantage and will specialize in that product. This means [Republic Of Trade or Econ Land] specializes in making computers, and [Republic Of Trade or Econ Land] grows corn.

Without trade both countries produce both products: Econ Land grows 100 bushels of corn and makes 50 computers in an hour, and the Republic of Trade grows 80 bushels of corn and makes 220 computers in an hour. Show that if they specialize and trade 70 computers in exchange for 90 bushels of corn, they end up with more of both products.

Econ Land is trading corn in exchange for computers with the Republic of Trade now (you might remember they were working with wheat and cars before). Let's see
if they can benefit from working with each other, from both an economic and environmental perspective.
Start by filling in the table below.
Econ Land
Republic of Trade
Corn
200 bushels/hour
300 bushels/hour
Computers
100/hour
300/hour
To grow a bushel of corn
[ Select ]
[ Select ]
costs them...
computers
computers
To make a computer costs
[ Select ]
Select ]
them...
bushels of corn
bushels of corn

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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