(a) Discuss what international trade is and four (4) ways it affects small open economies? (b) The following table illustrates the maximum output in the production of Lumber and Wheat for USA and Guyana; assume that only one good is being produced. USA Guyana Wheat Lumber Lumber =0, Wheat = 900 Lumber =300, Wheat = 0 Lumber = 0, Wheat = 1000 Lumber=200, Wheat = 0 i. ii. iii. Which country has the absolute advantage in wheat production? Which country has the absolute advantage in Lumber production? | What is the opportunity cost of one more unit of Lumber in Country A? |
(a) Discuss what international trade is and four (4) ways it affects small open economies? (b) The following table illustrates the maximum output in the production of Lumber and Wheat for USA and Guyana; assume that only one good is being produced. USA Guyana Wheat Lumber Lumber =0, Wheat = 900 Lumber =300, Wheat = 0 Lumber = 0, Wheat = 1000 Lumber=200, Wheat = 0 i. ii. iii. Which country has the absolute advantage in wheat production? Which country has the absolute advantage in Lumber production? | What is the opportunity cost of one more unit of Lumber in Country A? |
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 1CQQ
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Please assist with question a and b i, ii and iii.
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Step 1: Introduce the concept of absolute advantage.
VIEWStep 2: (a) Discuss what international trade is and four ways it affects small open economies.
VIEWStep 3: b) i) Determine which country has the absolute advantage in wheat production.
VIEWStep 4: b) ii) Determine which country has the absolute advantage in Lumber production.
VIEWStep 5: c) Determine the opportunity cost of one unit of Lumber in Country A (USA).
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