The concept of comparative advantage in international trade suggeststhat:A) Each country should produce all goods domesticallyB) Each countryshould focus on producing goods where it has the highest absoluteadvantageC) Each country should produce goods where it has the highestopportunity costD) Each country should produce goods where it has thelowest opportunity cost

The concept of comparative advantage in international trade suggests that: D) Each country should…

Answered: The concept of comparative advantage in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Historical evidence suggests that, when technology matures and industrial production moves to countries with lower costs, products which in the past were exported will start being imported.The theory that foresaw this trade reversal goes under the name of:a. Factor endowment reversalb. Theory of overlapping demandc. Theory of product life cycled. Theory of dynamic comparative advantagee. None of the above
As a country opens itself up to greater international trade, the sector in which the country does not have a comparative advantage will ultimately have to shut down entirely in the face of import competition. Group of answer choices True False
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desonia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 18 million pounds of grain and 9 million pounds of sugar, as indicated by the grey stars marked with the letter A. Maldonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR) , while Desonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR) . Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two…
The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that Group of answer choices the United States has comparative advantage in producing computer chips. the United States has comparative advantage in producing televisions. the opportunity cost of producing computer chips in the United States is higher than that in Japan. the opportunity cost of producing televisions in Japan is higher than that in the United States.
Starting with the production frontiers for Nation 1 and Nation 2 shown in Figure 5.4, show graphically that even with a small difference in tastes in the two nations, Nation 1 would continue to have a comparative advantage in commodity X.
We know that in antiquity, China exported silk because no one in any other country knew how to produce this product. From this information we know that China had a comparative advantage in silk. no comparative advantage could exist because the technology was not diffused. China exported silk for political reasons even though it had no comparative advantage. China had an absolute advantage, but not a comparative advantage in silk. China was unable to profit by exporting silk because it was unknown in the rest of the world.
From the trade model, given the countries are at least a bit different from each other,................ Group of answer choices both will always gain from voluntary trade The country that negotiates best will gain and the other will lose out from trade The country with the absolute advantage will gain at the expense of the other country The country with the comparative advantage will gain at the expense of the other country
State what the theory of comparative advantage forecasts: When there are two countries A and B, and two goods are produced by them: good X and Y. a) Trade between A and B will only take place if both countries are at a comparatively similar stage in the development of their economies. b) Trade can take place even if country A has an absolute advantage in both providing that B chooses to specialize in the good in which it has the least comparative disadvantage, and A specializes in the one in which it has the greater comparative advantage. c) Trade can only take place if country A has an absolute advantage in producing one of the goods, and country B has an absolute advantage in producing the other. d) None of the above.
In the United States, one worker can produce 10 tons of steel per day or 20 tons of chemicals per day. In the United Kingdom, one worker can produce 5 tons of steel per day or 15 tons of chemicals per day. Show by way of calculations: a) The United States has absolute advantage in the production of? b) The United Kingdom has a comparative in the production of? c) If trade occurs between the United States and the United Kingdom, American firms will specialize in the production of?
(g) Explain how is the production structure (i.e. which goods are produced) affected in each country by opening up to trade. Is this consistent with the empirical evidence we observe in reality? How can this model be modified to produce a less stark result?
Many trading partners trade the same goods and services with one another. The U.S. exports automobiles to Europe and Europe exports automobiles to the United States. In fact, that's true for food, appliances, computers and many other goods. Does intra-industry trade contradict the theory of comparative advantage? Why or why not?
The countries of Nickeltown and Lykesville each produce two goods: Ovens and Dishwashers. The table below lists the production for each good, for each country per year when each country uses half of their resources to produce each good. Country Production of Ovens Production of Dishwashers Nickeltown 105 Lykesville 147 What is the opportunity cost of producing 1 Ovens in Nickeltown Dishwashers 70 42 What is the opportunity cost of producing 1 Ovens in Lykesville Dishwashers ONickeltown OLykesville ONot enough information Which country has a comparative advantage in producing Ovens?

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