Consider two individuals, Tanek and Kalene each of whom knits sweaters and makes hotdogs, respectively. The gains from trade between Tanek and Kalene are most obvious in which of the following cases?
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- Andreas can knit 1 scarves per hour and 4 hats per hour. Katya can knit 9 scarves per hour and 2 hats per hour. What is the opportunity cost of one scarf (in terms of number of hats) for the person with the absolute advantage in scarf production?If two parties trade based on comparative advantage and both gain, in what range must the price of the trade lie? Give an exampleWhy is comparative advantage more important than absolute advantage in determining whether trade is beneficial?
- in the heckler-ohlin analysis, a country imports the good that uses intensively the countries relatively _____ factor of production, and a consequence of trade is that the income distribution in the country shifts away from the _____ factor a. scarce; abundant b. abundant; abundant c. abundant; scarce d. scarce; scarceList any three non-economic rationale of intervention of trade ? Which non-economic rationale will be more popular in a post COVID world ?List any three non-economic rationale of intervention of trade ? Which non-economic rationale will be more popular in a post COVID world ?In an 8-hour day, Blake can produce 15 longbows or 15 arrows. In the same 8-hour day, Denice can produce 20 longbows or 80 arrows. Is it possible for both Blake and Denice to gain from trade?
- Can more than one producer have an absolute advantage at producing the samegood? Why or why not?Gary and Brenda both have similar businesses in the garment industry making caps and backpacks. In one day, Gary can make 60 caps and 12 backpacks when he divides his production resources equally between the two products. In one day, Brenda can produce 80 caps and 20 backpacks. Answer the following questions and show all calculations to support your answers. a. Who has the comparative advantage in producing backpacks? Explain with calculations.b. What is Brenda's opportunity cost of making a cap compared to Gary's? Explain with calculations.c. Based on your calculations in a) and b) above, who should specialize in making what if they intend to trade? Explain with calculations.d. If Gary and Brenda decide to specialize in what they do best, what would be the new production per day for each of them? Explain with calculations.e. If Gary and Brenda decide to trade, what would be the terms of trade for a backpack and how does each benefit from trading? Explain with calculations.Why is the theory of absolute advantage incapable of explaining trade in the real world? Explain.
- The main advantage of trade between two countries is that A) trade makes both countries more self-sufficient. B) employment in both countries will increase. C) both countries can produce beyond their previous resource and productivity constraints. D) both countries can consume beyond their previous resource and productivity constraints.Suppose that an hour of work in Germany can produce 5 pastries or 4 sausages. In Denmark, an hour of work produces 4 pastries or 3 sausages. Which country has the absolute advantage in pastries? In sausages? Calculate the opportunity cost of each good in each country. Which country has the comparative advantage in each good? Why? What would be a mutually beneficial terms of 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. Which country has the absolute advantage in the production of rubber? Which country has the absolute advantage in the production of radios? Explain your answers to (a) and (b). Calculate the opportunity cost of producing 80 additional radios in Japan. Calculate the opportunity cost of producing 80 additional radios in Malaysia. Which country has the comparative advantage in producing radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan. Calculate the opportunity cost of producing 10 additional tons of rubber in Malaysia. Which country has the comparative advantage in producing rubber? In what product should Japan specialize? In what product should Malaysia specialize? If Malaysia wishes to trade 10 tons of rubber with Japan in exchange for radios, what is the lowest number of radios it should ask for in order to benefit…
