Reasons behind Gains from trade .

Question

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Answer 1

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 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

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Without Trade Production Consumption With Trade Production Everglades Denali Shorts (Millions of Almonds Shorts Almonds pairs) (Millions of pounds) (Millions of pairs) (Millions of pounds) 12 16 5 30 12 16 5 30 64 0 0 20 Trade action Imports 13 ▼ Exports 39▾ Imports 13 ▼ Exports 39 Consumption Gains from Trade Increase in Consumption

Practice: Their labor forces are each capable of supplying four million hours per week that can be used to produce shorts, almonds, or some combination of the two. Country Shorts Almonds (Pairs per hour of labor) (Pounds per hour of labor) Everglades 4 16 Denali 5 10 Suppose that initially Denali uses 1 million hours of labor per week to produce shorts and 3 million hours per week to produce almonds, while Everglades uses 3 million hours of labor per week to produce shorts and 1 million hours per week to produce almonds. As a result, Everglades produces 12 million pairs of shorts and 16 million pounds of almonds, and Denali produces 5 million pairs of shorts and 30 million pounds of almonds. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of shorts and almonds it produces. Everglades's opportunity cost of producing 1 pair of shorts is4 pounds of…

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 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

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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 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

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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 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

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Answer 5

Chapter 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

Answer 6

Chapter 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

Answer 7

Chapter 32, Problem 32.1LO

To determine

Reasons behind Gains from trade.

Answer 8

Expert Solution & Answer

Answer to Problem 32.1LO

Gains from specialization: Economies of scale is an advantage that the country receives from specialization. With more and more production, the average cost of production decreases and total output increases.

Gains from trade: Two countries trade with each other only when they find it to be mutually beneficial. The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade. A country specializes in a production process due to absolute or comparative cost advantage.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Adam Smith mentioned that Gains from trade arises due to absolute advantage in the cost of production. David Ricardo mentions that a country may have absolute cost advantage but international trade should depend on comparative cost advantage. It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/economy producing a commodity at a lower opportunity cost can produce it more efficiently. Thus gain from trade can arise from cost advantage in importing the product over domestic production.

Answer 12

Economics Concept Introduction

Introduction:

International Trade: Trade between two different countries is known as international trade.

Specialization in production: A country specializes in a production process due to absolute or comparative cost advantage.

Gains from trade: The benefits the country receives through more production and consumption of goods because of specialization of production and international trade is known as Gains from trade.

Answer 13

Ch. 32 - Prob. 32.1LO Ch. 32 - Prob. 32.2LO Ch. 32 - Prob. 32.3LO Ch. 32 - Prob. 32.4LO Ch. 32 - Prob. aFCT Ch. 32 - Prob. bFCT Ch. 32 - Prob. cFCT Ch. 32 - Prob. dFCT Ch. 32 - Prob. 1CTQ Ch. 32 - Prob. 2CTQ

Reasons behind Gains from trade .

Reasons behind Gains from trade.

Answer to Problem 32.1LO

Explanation of Solution

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Chapter 32 Solutions