Economics 3. Consider the following table that presents the labour requirements for production in the East and West (labour hours per unit of output) Clothing 20 15 Food East 10 West 5 Answer the following questions. a. Does the East have an absolute advantage in clothing production? Does the West have an absolute advantage in clothing production? Does the East have an absolute advantage in food production? Does the West have an absolute advantage in clothing production? Explain. b. Does the East have a comparative advantage in clothing production? Does the West have a comparative advantage in clothing production? Does the East have a comparative advantage in food production? Does the West have a comparative advantage in clothing production? Explain. c. In the West, what is the opportunity cost of producing one more unit of food? In the East, what is the opportunity cost of producing one more unit of food? Explain. d. Under free trade, where should East and West produce food and clothing, so as to maximize the production of food and clothing? Explain.

Economics 3. Consider the following table that presents the labour requirements for production in the East and West (labour hours per unit of output) Clothing 20 15 Food East 10 West 5 Answer the following questions. a. Does the East have an absolute advantage in clothing production? Does the West have an absolute advantage in clothing production? Does the East have an absolute advantage in food production? Does the West have an absolute advantage in clothing production? Explain. b. Does the East have a comparative advantage in clothing production? Does the West have a comparative advantage in clothing production? Does the East have a comparative advantage in food production? Does the West have a comparative advantage in clothing production? Explain. c. In the West, what is the opportunity cost of producing one more unit of food? In the East, what is the opportunity cost of producing one more unit of food? Explain. d. Under free trade, where should East and West produce food and clothing, so as to maximize the production of food and clothing? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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