1.Using the concept of free trade and the 3 free trade theories discussed in the class materials, explain the difference between absolute advantage and comparative advantage. Explain the difference between free trade and fair trade. Provide an example of your own household or work experience.

1.Using the concept of free trade and the 3 free trade theories discussed in the class materials, explain the difference between absolute advantage and comparative advantage. Explain the difference between free trade and fair trade. Provide an example of your own household or work experience.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 5PA

See similar textbooks

Related questions

Q: 2. Use the following table to determine the absolute advantage and comparative advantage of China…

A: Absolute advantage represent the ability of an individual or country to produce a greater quantity…

Q: Managerial economics cannot be used to show how the imposition of auto import quotas: a. raises auto…

A: 1. In the decision-making process, managerial economics employs a wide range of economic concepts,…

Q: 2) You have the following information concerning the production of wheat and cloth in the United…

A: Opportunity cost is defined as the cost of one alternative when another alternative is chosen.

Q: How China became the production center of the world? Explain using Comparative Advantage theory of…

A: A country's comparative advantage in economics is its ability to manufacture a specific product or…

Q: 5. Free-trade benefits In addition to the positive welfare effects that free trade has on an…

A: Free trade has variety of benefits. It results in increased variety of goods available to the…

Q: 4. Suppose that Ontario and Vermont each produce two goods, maple syrup (M) and hockey sticks (H).…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Which of the following resources is the most rival? A- A music concert at a city park. B-A full…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Examine the meaning of the word "free" in "free trade" what is free about it? who is it free for?…

A: Imports and exports are not controlled under a free trade regime. It can also be defined as the…

Q: (b) Assuming that there are only two nations in the world, Africa and the USA, each nation produces…

A: I. Absolute advantage when compared between the production ability to produce two goods, considers…

Q: Task 3. You know the following information about the wine market in Georgia With tariff 30S 10%…

A: Given information

Q: 1-What is a comparative advantage in the context of international trade? What is the US traditional…

A: Globalisation has widened the domestic market to globe one . In which scope for firms , companies…

Q: 1. In free trade a country will not trade if A. Autarky prices and free trade prices are the same.…

A: A country engage in trade so that it can gain from the trade. If the autarky prices are larger than…

Q: 1. Production Possibilities Frontier

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 8. Use the information in the table below to answer the following questions. Unit labor requirement…

A: Absolute advantage is the ability of an country to produce a greater quantity of a…

Q: Explain the “Absolute” and “Comparative Advantage” Trade Theories using suitable examples

A: International Trade refers to the exchange or import and export of goods and services across the…

Q: Explain the two main categories of gains from trade which are 1. gains from exchange and 2. Gains…

A: Transfer or exchamge of goods and services between entities or individuals for a specified payment…

Q: 5. Free-trade benefits In addition to the positive welfare effects that free trade has on an…

A: The international market is the platform for countries to make an exchange of goods and services…

Q: Task 3. You know the following information about the wine market in Georgia With tariff 30$ 10%…

A: Answer: Note: the numbers have point that is taken as decimals. But 3 zeros after the decimal…

Q: QUESTION 1 To ensure that trade benefits all parties involved, a, the trade must involve services as…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: 4. What is the relationship between the concept of comparative advantage and the law of increasing…

A: The decision regarding specialization in international trade is based on two key principles -…

Q: 14. The most obvious benefit of specialization and trade is that they allow us to consume more goods…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Suppose that Country A and Country B have unit labour requirements for producing one tonne of steel…

A: Note:- “Since you have posted a question with multiple sub-parts, we will solve the first three…

Q: 1. Wheat and the welfare consequences of trade: a. [Basic static analysis of trade] Construct a…

A: Trade is a fundamental monetary idea including the trading of labour and products, with remuneration…

Q: Evaluate the economic effect in the free market of a country for a good if its government imposes a…

A: In the free market, the equilibrium occurs at the intersection point of market demand and market…

Q: 5. The Heckscher-Ohlin theory of international trade claims that: a. The global market determines…

A: Countries usually have different stocks of factors that are used in production. Some countries are…

Q: In free trade a country will not trade if A. Autarky prices and free trade prices are the same. B.…

A: "Since you have asked multiple questions, we will answer only first question for you. If you have…

Q: Question 1: Assume there are two nations: Panama and Guatemala that produce two commodities:…

A: Comparative Advantage - A country has a comparative advantage that good if opportunity cost of that…

Q: What is the law of comparative advantage, and why is it important in international trade?

A: Comparative advantage refers to the situation where the ability of one country to produce goods and…

Q: 3. Trade creation and trade diversion Suppose that with free trade, the cost to the United States of…

A: GIVEN Trade creation and trade diversion Suppose that with free trade, the cost to the United…

Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

1.Using the concept of free trade and the 3
free trade theories discussed in the class
materials, explain the difference between
absolute advantage and comparative
advantage.
Explain the difference between free trade and
fair trade.
Provide an example of your own household
or work experience.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
Why might intra-industry trade seem surprising from the point of view of comparative advantage?
How does comparative advantage lead to gains from trade?
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?