Computers                 Wheat country A       10                                4 country B        6                                 3 Table shows the number of hours of labor required to produce 1 unit of output of computers and wheat in country A and B. Country ……… has an absolute advantage in computers.  Country………. has an absolute advantage in wheat.  Country……… has a comparative advantage in computers.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...
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                     Computers                 Wheat

country A       10                                4

country B        6                                 3

Table shows the number of hours of labor required to produce 1 unit of output of computers and wheat in country A and B.

  1. Country ……… has an absolute advantage in computers. 

  2. Country………. has an absolute advantage in wheat. 

  3. Country……… has a comparative advantage in computers. 

  4. Country……... has a comparative advantage in wheat. 

  5. Price ratio( computers/wheat) should be between …………. and …………. for free trade. 

 

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