Answered: If a nation lhat does not allow…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If a nation lhat does not allow international trade in
steel has a domestic price of steel lower than I he
world price, then
~ the nation has a comparative a dvan ta~e in oroduc·
ing steel and would become a steel exporter if il
opened up trade.
h. the nation has a comparative a dvan ta~e in oroduc·
ing steel and would become a steel importer if il
opened up trade.
c. the nation does not have a comparative advantage
in producing steel and would become a steel
exporter if it opened up trade.
rl. the nation does not have a comparative advantage
in producing steel and would become a steel
importer if it opened up trade.

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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