Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 3, Problem 6PA
Subpart (a):
To determine
Calculate
Subpart (b):
To determine
Calculate opportunity cost.
Subpart (c):
To determine
Specialization in the production.
Subpart (d):
To determine
Trade and the price of the product.
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Suppose that a tailor in Cottonland can sew either 40 cotton shirts or 10 silk shirts per week, and a tailor in Silkland can sew either 18 cotton shirts or 6 silk shirts per week. There are 20 tailors in Cottonland and 20 tailors is Silkland. Answer the following questions:
2.1. What country has the absolute advantage in sewing cotton shirts? What country has the absolute advantage in sewing silk shirts?
2.2. What country has the comparative advantage in sewing cotton shirts? What country has the comparative advantage in sewing silk shirts? Numerically
2.3. If the two countries specialize and produce according to the comparative advantage criterion, how much in terms of cotton and silk shirts each country will produce per week? Fill in the table below with your calculations.
Cotton shirts/per week
Silk shirts/per week
Cottonland
Silkland
Write an essay related to this treatise:NAFTA (North American Free Trade Agreement):
In the introduction, develop the origin of comparative advantage and its relationship with international trade, using the selected treaty as an example.
In the development of the essay, present:to. A description of the treaty that includes:* the reasons for the creation of the selected treaty and the countries included in it.* the benefits and effects of export and import in the treaty.* What were the obstacles encountered in the development of the treaty.
England and Scotland both produce scones and sweaters. Suppose that an English works can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour.
a. Which country has the absolute advantage in the production of each good? Which country has the comparative advantage?
b. If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain.
c. If a Scottish worker could produce only 1 sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.
Chapter 3 Solutions
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