1.                               Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
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Chapter3: Interdependence And The Gains From Trade
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1.                               Explain the difference between absolute advantage and comparative advantage. Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

 

  1. Consider the following pairs of Which would you expect to have the more elastic demand? Why?

 

  1. water or diamonds

 

  1. insulin or nasal decongestant spray

 

  1. food in general or breakfast cereal

 

  1. gasoline over the course of a week or gasoline over the course of a year

 

  1. personal computers or IBM personal computers
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