Reasons for experiencing gains from trade even if neither county has a comparative advantage Introduction: Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

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Answer 1

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

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Short Description Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85) a. How much does aggregate demand need to change to restore the…

Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 1000 billion dollars with an increment of 50 billion dollars, and the y-axis is scaled from 0 to 180 units with an increment of 10 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (200, 40)Point 2 at (800, 160)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (200, 160)Point 2 at (800, 40)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (350, 170)Point 2 at (900, 60)A vertical Long-run Aggregate Supply, LRAS line with two endpoints:Point 1 at (500, 170)Point 2 at (500, 0)Two Reference Points:Lines AS and AD1 intersect at (600, 120)Lines AS, AD, and LRAS intersect at (500, 100) a. How much does aggregate demand need to change to restore the…

a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ billion Suppose instead that the MPC is 0.95. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.

Answer 2

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

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Answer 3

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

Answer 6

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.

Answer 7

Chapter 17, Problem 1.1P

To determine

Reasons for experiencing gains from trade even if neither county has a comparative advantage

Introduction:

Comparative Advantage: The ability of the nations to produce goods at a lower opportunity cost than other nations is termed as Comparative Advantage

Answer 8

Expert Solution & Answer

Explanation of Solution

Even ifneither of the countries has a comparative advantage, the trade increases the variety of goods and services available for consumers to choose from. Further, it helps to keep the domestic prices in check as the goods and services are imported from other countries are sold at the world prices. This will further lead to the more consumption and will help to boost the economic growth of the county. It also helps to keep the nations connected to the world economy. Also, it helps in the exchange of cultures and values.