Gain from trade when two countries have no comparative advantage in either of the goods.

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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 2, Problem 7QE

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Gain from trade when two countries have no comparative advantage in either of the goods.

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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically. 2. Consider the following table of long-run total costs for three different firms: Quantity Total Cost ($) Firm A Firm B Firm C 1 60 11 21 2 70 24 34 3 80 39 49 4 90 56 66 5 100 75 85 6 110 96 106 7 120 119 129 Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer with necessary calculations.

Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.

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 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

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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 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

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Answer 4

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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 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

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Answer 5

Chapter 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

Answer 6

Chapter 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

Answer 7

Chapter 2, Problem 7QE

To determine

Gain from trade when two countries have no comparative advantage in either of the goods.

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Answer 11

Ch. 2.1 - Prob. 1Q Ch. 2.1 - Prob. 2Q Ch. 2.1 - Prob. 3Q Ch. 2.1 - Prob. 4Q Ch. 2.1 - Prob. 5Q Ch. 2.1 - Prob. 6Q Ch. 2.1 - Prob. 7Q Ch. 2.1 - Prob. 8Q Ch. 2.1 - Prob. 9Q Ch. 2.1 - Prob. 10Q

Gain from trade when two countries have no comparative advantage in either of the goods.

Solution Summary: The author explains comparative advantage is the ability of a person or country to produce more goods and services with lower opportunity cost.

Gain from trade when two countries have no comparative advantage in either of the goods.

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