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- Draw the graphs and explain the factors that cause the movement along the
demand curve and shifts of demand curve. - Compare and explain absolute and
comparative advantage by giving examples. - Draw the graphs and explain the factors that cause the movement along the supply curve and shifts of supply curve.
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- For each good produced in a market economy, demand and supply determine Comparative advantage The price of the good sold in the market, but not the quantity bought and sold in the market The quantity of the good bought and sold in the market, but not the price Both price and quantity of the good bought and sold in the market Neither price nor quantity is determined by demand and supply because prices are ultimately set by producersExplain the difference between absolute advantage and comparative advantage. Which is the basis for international trade, and why? The graph below represents the market for sugar in the U.S. The domestic supply and demand curves are drawn, the world price for sugar is indicated, and the effect of a tariff the US is imposing on sugar imports is shown. Use the graphic to calculate consumer surplus, producer surplus, economics surplus, government revenue, and deadweight loss. Do so under each of the following three situations: 1) no trade, 2) free trade, and 3) the sugar tariff. A friend tells you the following: “Free trade sounds good, but a country like Honduras doesn’t have any comparative advantage compared to the United States. Therefore, trade with us will exploit them and make their economic situation worse.” Explain to your friend the error in his thinking.Country A specializes in producing kiwis. Country B specializes in producing oranges. As a result, Country A can consume more kiwis and oranges than it could have if it had tried to grow kiwis oranges itself and had decided not to trade. This illustrates the concept of: Group of answer choices The gains of trade Absolute advantage Supply & demand The value chain
- q50c- Explain who should grow apples and who should grow wheat using the concept of comparative advantage. Who is the buyer on the market for wheat? Who is the seller?Explain the concept of comparative advantage and how it is related to the benefit that nations derive when they engage in trade?The concept of comparative advantage is used by both countries and companies. Use a two goods example and two countries or companies to explain the comparative advantage theory. Use this theory to justify if its worthwhile for countries or companies specialize.
- Suppose that Country A can produce 6060 bags of sugar or 3030 bags of flour per worker hour. Country B can produce 4040 bags of sugar or 1010 bags of flour per worker hour. Assume that there is 100%100% specialization, and each country has 55 worker hours.If each country specializes in its comparative advantage, calculate the quantity of the good that Country B should produce.Suppose that Ontario and Vermont each produce two goods, maple syrup (M) and hockey sticks (H). The quantities of each good that can be produced by each region in a day are given below: ONTARIO VERMONT GALLONS OF MAPLE SYRUP/DAY 400 1200 HOCKEY STICKS/DAY 200 300 Which region has an absolute advantage in maple syrup production? Which region has an absolute advantage in hockey stick production? Find the opportunity costs of each good for both Ontario and Vermont. c. Should Ontario and Vermont specialize and trade? Which good should be produced by Ontario? Vermont? What are the terms of trade? Use PPCs and CPCs to show that each would be better off through specialization and trade. Of what principle does this question provide an example?Imagine that Beth is the best florist in the world and the best pianist in the world. But can earn more as a florist than a pianist. Using this example explain the difference between comparative and absolute advantage and tell us what profession Beth should pick.
- Suppose that an hour of work in Brazil can produce 1 pound of coffee or 4 pounds of sugar. In Colombia, an hour of work produces 2 pounds of coffee or 5 pounds of sugar. Which country has the absolute advantage in coffee? In sugar? 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?Many trading partners trade the same goods and services with one another. The U.S. exports automobiles to Europe and Europe exports automobiles to the United States. In fact, that's true for food, appliances, computers and many other goods. Does intra-industry trade contradict the theory of comparative advantage? Why or why not?Suppose you have a team of two workers: one is a baker and one is a chef. Your baker is talented but is inexperienced. Your chef is not only an elite chef but is also faster at baking. If your kitchen specialized according to absolute advantage, who would do the cooking? Who would do the baking? If your kitchen specialized according to comparative advantage, who would do the cooking? Who would do the baking? Which approach above is more efficient? Explain your answer.
