QUESTION 7Use the information in the table below to answer the 3 parts Production per unit of Labor: CanadaUnited StatesSteel100150Autos100450Part 1:Which country has absolute advantage in Steel? A.US B.Canada C.Both D.NeitherPart 2:Who has comparative advantage in Steel? Autos? A.US in autos, Canada in steel B.Canada in autos, US in steel C.Need more informationPart 3:Given the Law of Comparative Advantage, how should each country specialize? A.The US should produce both, and Canada should find something they are good at. B.The US should produce autos, and Canada should produce steel C.The US should produce steel, and Canada should produce autos D.Canada would avoid trading with the US because the larger country will inevitably take advantage of the smaller.

Absolute advantage: When a country produce a output in greater quantity with the same input used or…

Answered: QUESTION 7 Use the information in the…

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 7

Use the information in the table below to answer the 3 parts

*Production per unit of Labor:*
	Canada	United States
Steel	100	150
Autos	100	450

Part 1:

Which country has absolute advantage in Steel?

	A.	US
	B.	Canada
	C.	Both
	D.	Neither

Part 2:

Who has comparative advantage in Steel? Autos?

	A.	US in autos, Canada in steel
	B.	Canada in autos, US in steel
	C.	Need more information

Part 3:

Given the Law of Comparative Advantage, how should each country specialize?

	A.	The US should produce both, and Canada should find something they are good at.
	B.	The US should produce autos, and Canada should produce steel
	C.	The US should produce steel, and Canada should produce autos
	D.	Canada would avoid trading with the US because the larger country will inevitably take advantage of the smaller.

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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