True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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Answer 1

Textbook Question

Chapter 33, Problem 1SCQ

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

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Please answer questions D-H, I have already answered A , B,C but it may help you to still solve them yourself. Thank you!

2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.

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Answer 2

Textbook Question

Chapter 33, Problem 1SCQ

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

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Answer 3

Textbook Question

Chapter 33, Problem 1SCQ

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 33, Problem 1SCQ

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

Answer 8

Expert Solution & Answer

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

To state: Whether the statement stating that the source of comparative advantage must be natural elements like climate and mineral is true or not.

Answer 12

Explanation of Solution

The statement is not true i.e. false. The source of comparative advantage may be natural element but it is not a compulsion. The natural elements like climate and mineral deposits are one of the source of advantage but not the only source. It has many other sources like external economies, geographical location, etc.

Answer 13

Economics Concept Introduction

Comparative Advantage: Comparative advantage is similar to opportunity cost. The conditions of opportunity cost should be followed for gain in trade under comparative advantage. Under this, the cost of production of good is analyzed and compared with other good.

Answer 14

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True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

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