EBK ESSENTIALS OF ECONOMICS
8th Edition
ISBN: 8220103599832
Author: Mankiw
Publisher: Cengage Learning US
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Question
Chapter 9, Problem 1QR
To determine
The advantage to the nation.
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What does the domestic price that prevails without international trade say about a nation's comparative advantage?
Use comparative advantage, two countries and two goods, to explain why every country can be better off from international trade.
Explain the concept of comparative advantage and how it leads to gains from international trade.
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EBK ESSENTIALS OF ECONOMICS
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- If these two nations trade, what good should each specialize in and export to the other? What would be the range for the terms of trade (price of aircraft in terms of corn, for example) that would make both nations benefit economically from trade?arrow_forwardWhy do economists oppose policies that restrict trade among nations and how the concepts of comparative advantage, specialization and trade apply to individuals and households?arrow_forwardAssume that you were a small country, what would you rather have a comparative or absolute advantage with trading? Explain your reasoning.arrow_forward
- Make the case in favor of international trade based on comparative advantage. Who are the winners and who are the losers when tariffs or quotas are implemented? Make the case for restricting international trade. Explain your answers thoroughly.arrow_forwardExplain the statement: “Countries that specialize based on comparative advantage gain from trade.”arrow_forwardAccording to the concept of comparative advantage, a good should be produced in that nation where: its domestic opportunity cost is least. money is used as a medium of exchange. its domestic opportunity cost is greatest. the terms of trade are maximized.arrow_forward
- Make the case in favor of international trade based on comparative advantage.arrow_forwardcan import tariffs and quotas reduce the benefits of trade in regards to absolute and comparative advantages?arrow_forwardWhat are the gains from trade, and explain why countires might still decide to trade even if no country had a comparative advantage?arrow_forward
- The table below describes production possibilities for Mexico and Nigeria. Each number in the table shows the number of workers needed to produce one unit of the product. Country Shoes Glasses Mexico 10 12 Nigeria 18 5 Which country has an absolute advantage in producing Glasses? Which country has a comparative advantage in producing Glasses? Which country has a comparative advantage in producing Shoes?arrow_forwardExplain why international trade is important to the economy.arrow_forwardTrade makes us worse off because it makes our economy weaker. We need to be completely self-sufficient."Evaluate this statement based on what you've learned about gains from trade, comparative advantage, and absolute advantage in this chapter. Is the statement true or false, and whyarrow_forward
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