Estonia Finland One Cell Phone 40 hours 15 hours Lumber (per board foot) 8 hours 4 hours Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. Does either Estonia or Finland have a comparative advantage and if so, in what product? O Both countries have the comparative advantage in both lumber and cellphones. O Estonia has an comparative advantage in lumber while Finland has the comparative advantage in cellphones. O Finland has an comparative advantage in lumber while Estonia has the comparative advantage in cellphones. O cannot be determined.

Estonia Finland One Cell Phone 40 hours 15 hours Lumber (per board foot) 8 hours 4 hours Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. Does either Estonia or Finland have a comparative advantage and if so, in what product? O Both countries have the comparative advantage in both lumber and cellphones. O Estonia has an comparative advantage in lumber while Finland has the comparative advantage in cellphones. O Finland has an comparative advantage in lumber while Estonia has the comparative advantage in cellphones. O cannot be determined.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
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Suppose that France and Italy both produce wine and cheese. France's opportunity cost of producing a case of cheese is 5 barrels of wine, while Italy's opportunity cost of producing a case of cheese is 10 barrels of wine. By comparing the opportunity cost of producing cheese in the two countries, you can tell that comparative advantage in the production of cheese and has a comparative advantage in the production of wine. Suppose that France and Italy consider trading cheese and wine. France can gain from specialization and trade as long as it receives more than of wine for each case of cheese it exports to Italy. Similarly, Italy can gain from trade as long as it receives of cheese for each barrel of wine it exports to France. more than Based on your answer to the last question, a price ratio between benefit both countries. has a barrels of wine per case of cheese will
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1. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Country Dolorium Contente Jeans Rye (Pairs per hour of labor) (Bushels per hour of labor) 20 16 Initially, suppose Contente uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Dolorium uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Dolorium produces 15 million pairs of jeans and 20 million bushels of rye, and Contente produces 8 million pairs of jeans and 48 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.…
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Candonia has a comparative advantage in the production of , while Desonia has a comparative advantage in the production of . Suppose that Candonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of
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