Exports goods and services that a country produces and then sells to other countries A country's ability to produce more of a given product than another country O A country's ability to produce a product relatively more efficiently than another country O goods and services that one country buy from other countries

Exports goods and services that a country produces and then sells to other countries A country's ability to produce more of a given product than another country O A country's ability to produce a product relatively more efficiently than another country O goods and services that one country buy from other countries

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: International Trade

Section: Chapter Questions

Problem 11QP

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Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (d) Which country has the comparative advantage in food? In fuel? Explain. (e) Which good(s) should each country specialize in?
Absolute and comparative advantage Consider two neighboring island countries, Botoga and Doporia. Each has 900,000 labor hours available per week that it can use to produce wheat, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of wheat or 1 pair of jeans. Wheat Jeans Country (Labor hours per bushel) (Labor hours per pair) Botoga 40 10 Doporia 36 6 _______ (Botoga / Neither / Doporia) has an absolute advantage in the production of wheat, and ______ (Botoga / Neither / Doporia) has an absolute advantage in the production of jeans. Initially, suppose Botoga uses 225,000 hours of labor per week to produce wheat and 675,000 hours per week to produce jeans, while Doporia uses 675,000 hours of labor per week to produce wheat and 225,000 hours per week to produce jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries,…
To determineThe ability of a country to produce a commodity with fewer resources.
Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (c) Which country has the absolute advantage in food? In fuel? Explain. (d) Which country has the comparative advantage in food? In fuel? Explain. (e) Which good(s) should each country specialize in?
Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (d) Which country has the comparative advantage in food? In fuel? Explain. (e) Which good(s) should each country specialize in? (f) Calculate the gains from trade from specialization.
“The U.S. and Mexico can gain from trade with one another by taking advantage of the low cost of producing microchips in the U.S and the low cost of producing brooms in Mexico. The cost of producing one broom in U.S is 9 microchips. In Mexico the cost of producing a broom is only 1/9 microchips. If the U.S. produces microchips and imports brooms, and if Mexico produces brooms and imports microchips, both countries will gain from trade because they‟ll each produce the good they can produce more cheaply and import the good that the other country produces more cheaply. Note that the U.S. has an absolute advantage in the production of microchips while Mexico has an absolute advantage in the production of brooms.” In context of International Business and Trade the above example of US and Mexico focuses on absolute advantage. Explain the theory of absolute advantage and comparative advantage and also how nation states are competing to gain advantage over each other.
County A will export ["bikes", "cars", "nothing"] and import ["bikes", "cars", "nothing"] because ["Country A has a gomparative advantage in cars", "Country A has a comparative advantage in bikes", "Country B has an absolute advantage in both goods"] . County B will export ["bikes", "cars", "nothing"] and import ["bikes", "cars", "nothing"] because ["Country A has a gomparative advantage in cars", "Country A has a comparative advantage in bikes", "Country B has an absolute advantage in both goods so Country A has nothing to trade with Country B"] .
France can produce either 50 units or 80 units of wine per labour hour. Canada can produce either 87 units of cheese or 49 units of wine per labour hour. Suppose Canada follows its competitive advantages in deciding what to produce and trade with France at a trade of wine per unit of cheese. For every 3500 units of goods that Canada produces and trades with France, what are the gains from trade in terms of the other goods?
Nation 1 - 400 million employees Nation 2 - 400 Million employees Nation 1 and 2 workers can produce - 16 TVs per year Nation 1 worker can produce - 40kg Beef per year Nation 2 worker can produce - 20 kg Beef per year Which country has comparative advantage for TVs and which country has comparative advantage for Beef
1. Determine which country has a comparative advantage in each good. 2. If Country A and Country B each have 100 units of labour, calculate the maximum production of each good for both countries. 3. In the absence of trade, Country B uses 20% of its total labour units to produce steel and the rest to produce oil. Country A uses 60% of its total labour units to produce steel and the rest to produce oil. Calculate how many tonnes of steel and oil can be produced by both countries. 4. Both countries agree that one tonne of steel can be exchanged for one tonne of oil. Calculate the gains after trade is allowed if Country A consumes 30 tonnes of oil domestically.
Trade between individuals and between nations leads to: O Increased specialization O Lower living standards Higher product prices Greater self-sufficiency
Suppose there are two countries Peru and Japan that produces 7,523 units ofFood or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5,000. d) Which country has the comparative advantage in food? In fuel? Explain. e) Which good(s) should each country specialized in?