Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2 There is now also another country, Foreign, with a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1. Now suppose world relative demand takes the following form: Demand for apples/demand for bananas = price of bananas/price of apples. Graph the relative demand curve along with the relative supply curve. What is the equilibrium relative price of apples? Describe the pattern of trade. Show that both Home and Foreign gain from trade.

Q: Consider an H-0 economy in which there are two countries (US and France), two goods (wine and…

A: Trade is defined as the exchange of commodities and services across the boundary of the country.

Q: when romania opened itself to international trade, the price of corn in romania almost doubled.…

A: Theory of Comparative Advantage -:…

Q: Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit…

A: We will answer only the first question as the exact question number is not mentioned here.

Q: Econ Land is trading corn in exchange for computers with the Republic of Trade now (you might…

A: The transfer of services and goods that takes place between individuals or entities being done in…

Q: If the production possibilities frontier of one the trade partners ( " Country A " ) is bowed out (…

A: A model for showing the tradeoffs which are associated with the allocation of resources between the…

Q: Calculate the gains from trade—that is, the amount by which each country has increased its…

A: The question is based on comparative advantage trade. Comparative advantage is when a country is…

Q: 17. Which of the following statements is FALSE ? a) This model shows only half of the benefits from…

A: International trade is the concept of buying and selling goods and services between different…

Q: Suppose in a given year, France can produce 100 tons of cheese or 500 oranges. Spain can produce 150…

A: "According to the comparative advantage countries will produce and export those goods which they can…

Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…

A: A nation is said to have comparative advantage in the production of a good or service if it can…

Q: Consider a two country, two goods, one factor (labor) model of international trade. Suppose home…

A: We are authorized to answer three subparts at a time since you have not mentioned which part you are…

Q: Based on Comparative advantage, what factors have helped the united states to become the world's…

A: The country that can produce a good at a lower opportunity cost compared to the other countries, the…

Q: The U.S produces two goods. Micro Lectures (M) and Ice Cream (I) It does so using the function 8M^2…

A: US produces on the PPF 8M2+2I2=500 The citizens utility is given by, U(M.I)=10M0.5I0.5 World prices…

Q: True or False: If Country B has an absolute advantage over Country A in producing bicycles, it will…

A: Let us suppose an economy produces only two goods -  X and  Y. Opportunity cost, in simple economic…

Q: What is the relationship between production costs and comparative advantage?   Group of answer…

A: The involvement in more open international trade is always beneficial for an economy because it…

Q: Consider the two countries of Syria and UAE. A business man wants to do trade between the two…

A: Since you have posted a question with multiple sub parts, we will solve first three subparts for…

Q: Use the table below to answer the questions concerning absolute and comparative advantages.…

A: The theory of Absolute advantage is also known as pure theory of international trade. According to…

Q: Suppose an economist develops an international trade model based on the assumption that there are…

A: The Economist mostly considered only two countries and two goods for the better understanding of the…

Q: Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in…

A: To understand the decline in output, let us understand the backdrop of the situation before the…

Q: In Country T, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of…

A: It might be argued that if countries used the concept of comparative advantage to choose what…

Q: Q. 4 Export - biased growth in Country H will : O. Improve the terms of trade of Country F. O.…

A: Meaning of Trade: The term trade refers to the situation under which the products and goods are…

Q: Labor productivity coefficients for the US and Brazil are given by the following table: Country…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Consider a two country, two goods, one factor (labor) model of international trade. Suppose home…

A: The following table represents the output per labor in home and foreign country: 1) The opportunity…

Q: It has been shown that the US has comparative advantage in capital-intensive goods while China has…

A: The ability of an economy for producing a specified good or service at a lower cost of opportunity…

Q: If each country specializes in the good in which it has a comparative advantage,....will gain from…

A: Introduction According to comparative advantage, countries will trade with others, exporting…

Q: The principle of comparative advantage states that countries should specialize in the production of…

A: International trade is the commercial transactions between countries that take place. Consumer…

Q: What is one possible price of capital-intensive goods (in terms of labor-intensive goods) that would…

A: In country A,  1 ton of capital-intensive goods  =200/200 =  1 ton of labor intensive good In…

Q: Freedonia has a comparative advantage in the production of (grain, tea, neither grain nor tea, both…

A: A country has a comparative advantage in producing that good if the opportunity cost of producing…

Q: Automobiles                 Computers…

A: According to the question, it is given that :   Automobiles Computers USA 20 15 Germany  15 5…

Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…

A:

Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…

A: Comparative cost expressed in the context of opportunity cost.

Q: Which country has the comparative advantage in production of Good A? Group of answer choices…

A: International trade occurs on the basis of comparative advantage that represents the ability of a…

Q: Suppose that Cambodia decides to become self-sufficient in bananas and even to export t In order to…

A: Comparative advantage: It refers to the nation's production of goods and services with the lowest…

Q: Explain which product each of the countries should specialise in and export. Use the information…

A: The theory that states that there exists an advantage when the economy could be able to produce at a…

Q: The theory of comparative advantage: O a. Claims that economic well-being is enhanced if each…

A: Economic comparative advantage is the ability of a country to manufacture a specific product or…

Q: France can produce either 50 units or 80 units of wine per labour hour. Canada can produce either 87…

A:

Q: Suppose that each country decides to specialize in the production of the good un which it has the…

A: Given: Production possibility:   Car Aircraft Japan 250 150 Sweden 100 300

Q: Happyland can produce 40 tones of marshmallows or 20 tones of chocolate in a year. Friendshipland…

A: The comparative advantage demonstrates the difference of opportunity cost for producing a commodity…

Q: Suppose the US is relatively well endowed with skilled workers and Mexico is relatively well endowed…

A: Suppose the US is relatively well endowed with skilled workers and Mexico is relatively well endowed…

Q: South Korea has an absolute advantage in the production of an item, it must also have a comparative…

A: Opportunity cost measures the trade off between two goods.

Q: Explain, with a two-country, two-good model, why the Heckscher-Ohlin model predicts only partial…

A: Trade between 3 or additional countries and product is noted as partial specialization attributable…

Q: Now suppose that if Zimbabwe uses all of its resources, it can produce 50,000 tons of metal ores or…

A: Both countries will trade that good in which they have a comparative advantage. The country has a…

Q: Shoes are labor-intensive and satellites are capital-intensive to produce. The United States has…

A: Heckscher-Ohlin theory is an international trade theory based on the comparative cost advantage and…

Q: _________has absolute advantage in the production of paper. ________ has comparative advantage in…

A: In 12 labour hours Nigeria can produce either 3 boxes of paper or 24 pens. At the same 12 labour…

Q: Assume that an American worker can produce 5 cars per year or 10 tons of grain per year, whereas a…

A: When two countries produce two goods and ready to make international transactions, a country will…

Q: Consider two countries that can produce rice and other products. If neither country has an absolute…

A: A country has an absolute advantage in the good which it can produce more than the other country.

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.