MICROECONOMICS
MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 9, Problem 4QAP

(a)

To determine

Explain Ricardo’s advice in self-service.

(b)

To determine

Advice to Portugal after knowing that light manufacturing led the most industrialization process.

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Explain briefly why a country can have an absolute advantage in the production of two goods, and yet a comparative advantage in the production of only one good just in a few sentences
In Country T, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice. In Country Y, it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice. Country T has a comparative advantage over Country Y in cocoa. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it; however, this conclusion stems from which of these inaccurate assumptions?   Multiple Choice   We have assumed constant returns to scale.   We have assumed the prices of resources and exchange rates in the two countries are dynamic.   We have assumed there are barriers to the movement of resources from the production of one good to another within the same country.   We have assumed that agrarian nations do not specialize in producing particular products.   We have assumed diminishing returns to specialization.
Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude: Question 48 options:   Canada has a comparative advantage in the production of hockey sticks.   Germany has a comparative advantage in the production of hockey sticks.   Canada has an absolute advantage in the production of maple syrup.   Germany has an absolute advantage in the production of maple syrup.
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