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 1.1PA

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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1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

A health study tracked a group of persons for five years. At the beginning of the study, 20%were classified as heavy smokers, 30% as light smokers, and 50% as nonsmokers. Resultsof the study showed that light smokers were twice as likely as nonsmokers to die duringthe five-year study, but only half as likely as heavy smokers.A randomly selected participant from the study died during the five-year period. Calculatethe probability that the participant was a heavy smoker

Consider two assets with the following returns: State Prob. of state R₁ R2 1 23 13 25% 5% 2 -10% 1% Compute the optimal portfolio for an investor having a Bernoulli utility of net returns u(r) = 2√√r+ 10. Compute the certainty equivalent of the optimal portfolio. Do the results change if short-selling is not allowed? If so, how?

Answer 2

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 1.1PA

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 1.1PA

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 1.1PA

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 5

Chapter 17, Problem 1.1PA

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 1.1PA

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 1.1PA

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.