MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
8th Edition
ISBN: 9781337096591
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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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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MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Macroeconomics, 8th (MindTap Course List)
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- when romania opened itself to international trade, the price of corn in romania almost doubled. does romania has comparative advantage in the production of corn? is romania an exporter or an importer of corn romania consumers of corn will be better off or worse off? how about the producers ? are there any gains from international trade?arrow_forwardIf 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_forwardIf a country produces more food and electronics than another country does it have a comparative advantage?arrow_forward
- Why 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_forwardMake 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_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_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_forwardWhich country has comparative at producing good x. How can you tell. Which country has a comparative advantage at producing yarrow_forward
- What are the gains from trade, and explain why countires might still decide to trade even if no country had a comparative advantage?arrow_forwardHow did the United States comparative advantage change in the period from about 1865 to 1914? What is Engel’s law? How does it relate to the changes in our economy international trade around that Post Civil War period?arrow_forwardIf each country specializes in the good in which it has a comparative advantage,....will gain from that trade becausearrow_forward
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