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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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***Please look at the screenshot for graphs***

Fill in the charts below with values based on the two Production Possibilities Frontiers above.

Motor Vehicle Production in the United States (in millions)

Cars	Trucks
	0
4
0

Motor Vehicle Production in Mexico (in millions)

Cars	Trucks
	0
	2
0

Which country has the absolute advantage in producing cars?

Which country has the absolute advantage in producing trucks?

Which country has the comparative advantage in producing cars?

Which country has the comparative advantage in producing trucks?

Should these two countries trade? Why or Why not?

Absolute and Comparative Advantage
Motor Vehicle Production in the U.S.
10
4
1
2
3
4
5
6
Millions
Trucks
Motor Vehicle Production in Mexico
2
2
Trucks
3
4
Millions
Cars
Millions
Cars Millions
2.

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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