Chapter 20, Problem 15P

To determine

The given table and explain the given statements.

Concept Introduction:

Opportunity Cost:

Opportunity Cost is the loss of benefit incurred by a person by choosing an alternative course of action.

Comparative Advantage:

The comparative advantage theory of international trade states that a country shall have a comparative advantage over the production of a good or service if its opportunity cost is lower as compared to another country.

Autarky:

Autarky is a situation when no goods are imported from other country and the country is self-sufficient in its production.

To determine

(b) Country that has comparative advantage in production of cars and oil.

To determine

(c) Production of cars and oil in autarky by Saudi Arabia and United States.

To determine

(d) Quantity of cars and oil produced in case of trade.

To determine

(e) Possibility for Saudi Arabia and United States to consume 400 million barrels of oil and 5 million cars.

To determine

(f) Quantity of cars and oil imported and exported and cost of oil in the world market.