Suppose that Slovenia and Slovakia both produce sunflowers and liquor. Slovenia's opportunity sunflowers while Slovakia's opportunity cost of producing a case of liquor is 11 bushels of sunflowers. By comparing the opportunity cost of producing liquor in the two countries, you can tell that production of liquor and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Slovenia and Slovakia consider trading liquor and sunflowers with each other. Slovenia can gain from specialization and trade as long as it receives more than of sunflowers for each case of liquor it exports to Slovakia. Similarly, Slovakia can gain from trade as long as of liquor for each bushel of sunflowers it exports to Slovenia. it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of liquor in terms of sunflowers) would allow both

Suppose that Slovenia and Slovakia both produce sunflowers and liquor. Slovenia's opportunity sunflowers while Slovakia's opportunity cost of producing a case of liquor is 11 bushels of sunflowers. By comparing the opportunity cost of producing liquor in the two countries, you can tell that production of liquor and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Slovenia and Slovakia consider trading liquor and sunflowers with each other. Slovenia can gain from specialization and trade as long as it receives more than of sunflowers for each case of liquor it exports to Slovakia. Similarly, Slovakia can gain from trade as long as of liquor for each bushel of sunflowers it exports to Slovenia. it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of liquor in terms of sunflowers) would allow both

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Two areas, Europe and America, can produce only goods A and B, under constant costs as indicated below. What will be the result of free trade between the two areas? In Europe In America 1 unit of good A 2 hours of labor 3 hours of labor 1 unit of good B 4 hours of labor 5 hours of labor a. Europe will export A and B to America. b. Europe will import A and export B. c. Europe will import B and export A. d. Europe will import A and B from America. e. No trade will take place.
Assume that the US can produce corn at a lower opportunity cost than South Korea and South Korea can produce cars at a lower opportunity cost than the US. Which of the following is not true? a. south korea should specialize production in cars b. both countries have a comparative advantage c. the us should specialize production in corn d. the us has an absolute advantage in production of corn and cars
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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
The following diagrams show the production possibilities frontiers (PPFS) for Armenia and Azerbaijan and their production of milk and razor trade. Which of the following statements is true when the two countries begin trading in razors and milk? Razors 15 10 5 Armenia 10 15 Milk (gallons) O Armenia will not trade with Azerbaijan O Armenia will export milk to Azerbaijan and import razors from Azerbaijan. O Armenia will export razors to Azerbaijan and import milk from Azerbaijan O Armenia will import razors and milk from Azerbaijan.. Razors 15 10 10 5 Azerbaijan 10 15 5 Milk (gallons)
The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade, the optimal product mix for China is alternative B and for the United States is alternative U. a. Are comparative-cost conditions such that the two areas should specialize? If so, what product should each produce? b. What is the total gain in apparel and chemical output that would result from such specialization? c. What are the limits of the terms of trade? Suppose that the actual terms of trade are 1 unit of apparel for 1 unit of chemicals and that 4 units of apparel are exchanged for 6 units of chemicals. What are the gains from specialization and trade for each nation?
2. Answer letter c and D.
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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
has an absolute advantage in the production of barley, and has an absolute advantage in the production of alfalfa. bushels of barley, whereas Megan's opportunity cost of producing 1 bushel of opportunity cost of producing alfalfa than Megan, has a has a comparative advantage in the production of barley. Larry's opportunity cost of producing 1 bushel of alfalfa is alfalfa is bushels of barley. Because Larry has a comparative advantage in the production of alfalfa, and