Answered: If France is said to have an absolute…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 4CQQ

See similar textbooks

Related questions

Question

If France is said to have an absolute advantage over Mexico in the production of wheat, this means that, given the same resources,

Mexico must have an absolute advantage in producing some good other than wheat.

a. France can produce more wheat than Mexico.

b. France has an absolute advantage in all goods that are complements to wheat.

c. France must have an absolute advantage over Mexico in producing all goods.

d. Mexico must have a comparative advantage over France in the production of wheat.

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions