Given the input-output relationships in the table below (data are output per unit of input) Input-Output Table Country A B Goods X 4 Y 1 8 Show that a country can have absolute advantage in both goods but comparative advantage in one good. Explain the basis for your conclusion.

Country X does not allow imports of clothing. In its equilibrium without trade, a sweater costs $20 and the equilibrium quantity is 3 million sweaters. One day, the president decides to open the market to international trade. The market price of a sweater falls to the world price of $16. The number of sweaters consumed in Country X rises to 4 million, while the number of sweaters produced declines to 1 million. a) illustrate in a graph the situation just described. Your graph should show all the numbers. b) Calculate the change in consumer surplus, producer surplus, and total surplus that results from opening up trade.

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Freedonia and Lamponia. Both countries produce potatoes and tea, each initially (i.e., before specialization and trade) producing 6 million pounds of potatoes and 3 million pounds of tea, as indicated by the grey stars marked with the letter A.   Suppose that Freedonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 2 million pounds of potatoes for 2 million pounds of tea. This ratio of goods is known as the price of trade between Freedonia and Lamponia. The following graph shows the same PPF for Freedonia as before, as well as its…

Suppose that one day of labor in each country produces the following quantities of fish and cheese: 1. Does France have a comparative advantage in the production of fish, cheese, or neither? Explain.   2. Does Japan have a comparative advantage in the production of fish, cheese, or neithter? Explain.   3. Suppose the countries decide to trade with each other—1 ton of cheese for 3 tons of fish. Would this trade be advantageous to both countries? Explain.     Country  Fish (tons) Cheese (tons) France 80 40 Japan 200 50

Taylor and Bobby are auto mechanics. Taylor takes 12 hours to replace an engine and 4 hours to replace a set of brakes.  Bobby takes 8 hours to replace an engine and 4 hours to replace a set of brakes.  State whether anyone has an absolute advantage at either task and, for each task, identify who has a comparative advantage.

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?

Refer to Table 1-1  Which country has a comparative advantage in the production of bread?  Group of answer choices Derryland Whetonia

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.

The United States and Canada have the production possibilities curves shown above.  It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 3 Corn? Why or why not? Show your work.

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