The world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that Country Z has a comparative advantage in gadgets and should be exporting them. Country Z should specialize in producing gadgets. Country A has a comparative advantage in gadgets and should be exporting them. Country A has a comparative advantage in whizbangs and should be importing them.
The world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that Country Z has a comparative advantage in gadgets and should be exporting them. Country Z should specialize in producing gadgets. Country A has a comparative advantage in gadgets and should be exporting them. Country A has a comparative advantage in whizbangs and should be importing them.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![The world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that:
- Country Z has a comparative advantage in gadgets and should be exporting them.
- Country Z should specialize in producing gadgets.
- Country A has a comparative advantage in gadgets and should be exporting them.
- Country A has a comparative advantage in whizbangs and should be importing them.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aa69a92-6482-48de-ba12-49603e3a7822%2F440d7f5d-850d-4d32-878e-96ca04438a73%2Fggddz9m_processed.png&w=3840&q=75)
Transcribed Image Text:The world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that:
- Country Z has a comparative advantage in gadgets and should be exporting them.
- Country Z should specialize in producing gadgets.
- Country A has a comparative advantage in gadgets and should be exporting them.
- Country A has a comparative advantage in whizbangs and should be importing them.
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