If two nations have the same endowments of factors, they can engage in international trade O 1) based on absolute advantage. 2) based on comparative advantage. 3) based on relative advantage. 4) based on economies of scales.
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- 5. The price of trade Suppose that Italy and Switzerland both produce jeans and stained glass. Italy's opportunity cost of producing a pane of stained glass is 3 pairs of jeans while Switzeriand's opportunity cost of producing a pane of stained glass is 9 pairs of jeans. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass and has a comparative advantage in the production of jeans. Suppose that Italy and Switzerland consider trading stained glass and jeans with each other. Italy can gain from specialization and trade as long as it receives more than of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from trade as long of stained glass for each pair of jeans it exports to Italy. as it recelves more than Based on your answer to the last question, which of the tollowing prices of trade (that is, price of stained glass in terms of…5. The price of trade Suppose that Croatia and Wales both produce ale and broccoli. Croatia's opportunity cost of producing a bushel of broccoli is 5 kegs of ale while Wales's opportunity cost of producing a bushel of broccoli is 10 kegs of ale. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of ale. has a comparative advantage in the Suppose that Croatia and Wales consider trading broccoli and ale with each other. Croatia can gain from specialization and trade as long as it receives more than of ale for each bushel of broccoli it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of broccoli for each keg of ale it exports to Croatia. Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of ale) would allow both Wales and Croatia to gain from trade? Check all that…Suppose that the opportunity cost ratio for apples and oranges is 1AE =30 in Germany but 10= 2A in Japan At which of the following international eschange ratios (terms of trade) with Gemany andJapan be willing to specialize and engage in trade with each otherO10=215AO 10= 1.25AO 10=0.25AO 10=0.15A
- This question pertains to the addendum to Chapter 2. Thefollowing tables show the production possibilities for twohypothetical countries, Italia and Nire. Which country has thecomparative advantage in producing butter? Which country hasthe comparative advantage in producing guns? What would be amutually agreeable rate of exchange between the countries?7. Terms of trade Suppose that Spain and Sweden both produce beer and stained glass. Spain's opportunity cost of producing a pane of stained glass is 4 barrels of beer, while Sweden's opportunity cost of producing a pane of stained glass is 10 barrels of beer. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass, and has a comparative advantage in the production of bef Sweden Suppose that Spain and Sweden consider trading stained glass and beer with each other. Spain can Spain specialization and trade as long as it of beer for each pane of stained glass it exports to Sweden. Slmmany, weden can gain from trade as long as it of stained glass for each barrel of beer it exports to Spain. receives more than receives more than Based on your answers to the previous question, which of the following terms of trade (that is, price of stained glass in terms of beer) would allow both…Question 2: Good Y - 20 18 164 14 12 10 8 6 4 2 Germany's Production Possibilities Frontier Good Y 20 18 16 Spain's Production Possibilities Frontier 2468 10 12 14 16 18 Good X 2468 10 12 14 16 18 20 Good X Refer to the Figure. Germany has a comparative advantage in the production of O neither good and Spain has a comparative advantage in the production of both goods. O Good X and Spain has a comparative advantage in the production of Good Y. O Good Y and Spain has a comparative advantage in the production of Good X. O both goods and Spain has a comparative advantage in the production of neither good.
- If Switzerland can produce chocolate at a lower relative cost than Belgium, what kind of advantage does Switzerland have? O a comparative advantage O an absolute advantage a resource advantage a production advantageE5In a two-country, two-product world, the statement 'Germany enjoys a comparative advantage over France in cars relative to ships' is equivalent to O a. a. Germany having a comparative advantage over France in cars and ships. O b. France having a comparative disadvantage compared to Germany in cars and ships. O c. France having no comparative advantage over Germany. O d. France should produce cars. O e. France having a comparative advantage over Germany in ships. L
- 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 advantageQUESTION 13 wine 90 8888888 80 70 60 50 40 30 20 PPF Portugal 1 CPF 10. 0 0 10 20 30 40 50 60 cloth wine 90 80 70 60 50 40 30 20 10 England 1 PPF CPF 0 0 10 20 30 40 50 60 cloth 13. According to the above set of production possibilities and consumption (trade) possibilities frontiers, what will happen to production and relative prices once trade is opened between these two countries? O a) Production of cloth in Portugal will fall to zero, while the price of wine will fall to ½ yd/bottle. b) Production of cloth in England will fall to zero, while the price of wine will increase to ½ yd/bottle. c) Production of wine in Portugal will increase to 90, while the price of cloth will fall to 2 yd/bottle. d) Production of wine in England will increase to 60, while the price of cloth will fall to 3 bottles/yd.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