96 FL If Honduras and Guatemala each specialize in producing the good in which they have a comparative advantage and then trade with one another original PPF. O both countries would end up on a point to the right of their O both countries would end up at a point to the left of their one country would remain on its original PPF, while the other country would end up on a point to the right of its O both countries would end up on a different point on their Unit 7- Chapter 1...xlsx Unit 7- Chapter 1..xlsx O Topic 2 (2).docx O Topic 2 (1).docx 11:09 PM 73°F SUI prt sc delete f12 pus backspace -> unu Bock enter pause T shift alt ctrl

96 FL If Honduras and Guatemala each specialize in producing the good in which they have a comparative advantage and then trade with one another original PPF. O both countries would end up on a point to the right of their O both countries would end up at a point to the left of their one country would remain on its original PPF, while the other country would end up on a point to the right of its O both countries would end up on a different point on their Unit 7- Chapter 1...xlsx Unit 7- Chapter 1..xlsx O Topic 2 (2).docx O Topic 2 (1).docx 11:09 PM 73°F SUI prt sc delete f12 pus backspace -> unu Bock enter pause T shift alt ctrl

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain how the gains from trade followfrom comparative advantage.
The countries of Nickeltown and Lykesville each produce two goods: Ovens and Dishwashers. The table below lists the production for each good, for each country per year when each country uses half of their resources to produce each good. Country Production of Ovens Production of Dishwashers Nickeltown 105 Lykesville 147 What is the opportunity cost of producing 1 Ovens in Nickeltown Dishwashers 70 42 What is the opportunity cost of producing 1 Ovens in Lykesville Dishwashers ONickeltown OLykesville ONot enough information Which country has a comparative advantage in producing Ovens?
21. According to David Ricardo, O A. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OB. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve O C. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O D. Countries should strive to develop their absolute advantage to benefit from trade with other countries
Sovle it
According to the resource-based view, there are economic gains from international trade because some firms in one nation generate exports that are valuable, unique, and hard to imitate that firms from other nations find it beneficial to import. O True O False
Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 61 units of pretzels or 14 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.34 units of cars for one unit of pretzel. For every 5050 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?
Morocco and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In Morocco it takes two hours for each worker to harvest green beans and two hours to harvest a tomato. Tunisian workers need only one hour to harvest the tomatoes but four hours to harvest green beans. Assume there are only two workers, one in each country, and each works 40 hours a week. a. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. b. Identify which country has comparative advantage in which product. c. Initially each country used ½ of the workers in producing green beans and tomatoes. If each country specializes based on comparative advantage find an exchange mechanism so that both gain from trade.
Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula = 5 cans tuna fish Tunata: 1 can baby formula = 7 cans tuna fish a. In what product should each nation specialize? Canswicki should produce baby formula and Tunata should produce tuna fish b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 4 cans tuna fish: (Click to select) v iI. 1 can baby formula = 8 cans tuna fish: (Click to select) v es iII. 1 can baby formula = 5.5 cans tuna fish: (Click to select)
Which of the following is proof that international trade is beneficial? O the fact that different regions in the United States specialize in different products O the international trade in exotic products O the sheer volume of trade between very different nationsswer text provided. O the concept of absolute advantage
According to David Ricardo, O A. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O B. Countries should strive to develop their absolute advantage to benefit from trade with other countries O C. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OD. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve
“The U.S. and Mexico can gain from trade with one another by taking advantage of the low cost of producing microchips in the U.S and the low cost of producing brooms in Mexico. The cost of producing one broom in U.S is 9 microchips. In Mexico the cost of producing a broom is only 1/9 microchips. If the U.S. produces microchips and imports brooms, and if Mexico produces brooms and imports microchips, both countries will gain from trade because they‟ll each produce the good they can produce more cheaply and import the good that the other country produces more cheaply. Note that the U.S. has an absolute advantage in the production of microchips while Mexico has an absolute advantage in the production of brooms.” In context of International Business and Trade the above example of US and Mexico focuses on absolute advantage. Explain the theory of absolute advantage and comparative advantage and also how nation states are competing to gain advantage over each other.
Which country has comparative advantage in the production of washing machines and automobiles?