Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + LMS Integrated Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305242500
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 3, Problem 4QR
To determine
The comparative advantage over absolute advantage for trade and the reasoning for the same.
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Is absolute advantage or comparative advantage more important for trade? Give an Example
Is the following statement true or false? Please explain.
"Everyone has a comparative advantage."
What is Comparative Advantage and how is it determined? Explain this concept in words.
Chapter 3 Solutions
Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + LMS Integrated Aplia, 1 term Printed Access Card
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Similar questions
- Give three examples of trade in servieces and explain how comparative advantage may play a role in them. Do you think there are other factors at work than comparative advantage?arrow_forwardWhat are the impacts of comparative advantage and absolute advantage?arrow_forwardIs absolute advantage or comparative advantagemore important for trade? Explain your reasoningusing the example in your answer to question 3.arrow_forward
- The principle of comparative advantage does not provide answers to certain questions. One of those questions is Do specialization and trade benefit more than one party to a trade? Is it absolute advantage or comparative advantage that really matters? How are the gains from trade shared among the parties to a trade? Is it possible for specialization and trade to increase total output of traded goods?arrow_forwardExplain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?arrow_forwardHow is the theory of absolute advantage similar to that of comparative advantage? How is it different?arrow_forward
- Evaluate the following statement: "Trade is like football: one team wins and the other team loses." This topic is related to chapter 2. Use your knowledge of ‘absolute advantage’ and ‘comparative advantage’ in your response.arrow_forwardA) Which producer has the comparative advantage in producing puzzles? Geppetto or Lewis B) Which producer has the comparative advantage in producing puppets? C) If both producers decided to trade with each other to stock their toy stores, which of the following is a range of terms of trade that would benefit both Geppetto and Lewis (1 puppet = x puzzles)? Please explain to me how to solve those questions. Don't just give me the answers. Thank you so much!arrow_forwardWhat is the relationship between production costs and comparative advantage? Group of answer choices Comparative advantage considers, “How much am I giving up to produce this good in this country?” Comparative advantage identifies the good for which the producer’s absolute advantage is relatively smaller. Comparative advantage identifies where the producer’s absolute productivity disadvantage is relatively larger. Comparative advantage happens when the production costs for both trading partners are the same.arrow_forward
- Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. Part 2 France Germany Wine (Bottles) Cheese (Pounds) Wine (Bottles) Cheese (Pounds) 0 8 0 25 1 6 1 20 2 4 2 15 3 2 3 10 4 0 4 5 5 0 Part 3 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? Part 4 A. Neither has a comparative advantage producing wine or cheese. B. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. C. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. D. France has a comparative advantage producing wine and cheese. E. Germany has a comparative advantage producing wine and cheese. Part 5 Suppose that France is…arrow_forwardThe following statement is true about comparative advantage. The principle was developed by the British Economist Henry Ford. A country with fewer environmental regulations and lower wages has a comparative advantage in modern manufacturing. Silicon Valley has a comparative advantage in high-technology due to a local abundance of silicon dioxide. The principle of comparative advantage is used to justify self-sufficiency and local production of goods.arrow_forwardTwo countries produce two goods and they each have 3 million hours of labor. Consider the table that shows the quantity produced per labor hour: Shirts Corn (bushels) Alpha 4 12 Beta 2 10 If each country specializes in the good for which it has a comparative advantage then in total the two countries can together produce million shirts and million bushels of corn. Enter whole numbers.arrow_forward
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