If two nations have the same endowments of factors, they can engage in international trade O 1) based on absolute advantage. 2) based on comparative advantage. 3) based on relative advantage. 4) based on economies of scales.
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- ABSOLUTE ADVANTAGE & COMPARATIVE ADVANTAGE Q.6. An average worker in brazil can produce an ounce of soybeans in 20 minutes and an ounce of coffee in 60 minutes, whilst an average worker in Peru can produce an ounce of soybeans in 50 minutes and an ounce of coffee in 75 minutes. Who has the absolute advantage in coffee? Explain II. Who has the comparative advantage in coffee? Explain III. If the two countries specialize and trade with each other, who will import coffee? ExplainAccording to the principle of comparative advantage, - countries should specialize in the production of goods for which they use more resources than their trading partners - countries with a comparative advantage in the production of every good need not specialize - countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners - countries should specialize in the production of goods for which they use fewer resources than their trading partnersa)What is: (not more than 3 sentences for each of them) Absolute advantage? Comparative Advantage? Heckser Ohlin Theorem? Difference of Heckscher Ohlin Theorem from Comparative advantage theory:
- Suppose the United States is currently producing 140 tons of hamburgers and 63 tons of tacos and Mexico is currently producing 14 tons of hamburgers and 35 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which each has a comparative advantage), then a total of _____ additional ton(s) of hamburgers can be produced for the two countries combined (enter a numeric response using an integer) and a total of ____ additional ton(s) of tacos can be produced.Q)Suppose that country A using one unit of labor can produce 80 pounds of apples or 20 pounds of oranges, while country B using the same unit of labor can produce 40 pounds of apples or 15 pounds of oranges. This shows that: Group of answer choices If A and B trade, A should specialize in the production of oranges. B has an absolute advantage in the production of apples. B has a comparative advantage in the production of apples. B has a comparative advantage in the production of oranges.Candonia has a comparative advantage in the production of , while Desonia has a comparative advantage in the production of . Suppose that Candonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of
- A producer has a comparative advantage in a good if it is the lowest opportunity cost producer of this good, even if it is not the most efficient producer of this good. True FalseIf a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods. True FalseTrue or False: According to the theory of comparative advantage in international trade, even if one country is less efficient in the production of all goods compared to another country, both countries can still benefit from trade by specializing in the production of the goods in which they have a comparative advantage, leading to overall gains in efficiency and economic welfare.
- Glacier has a comparative advantage in the production of peas , while Denali has a comparative advantage in the production of . Suppose that Glacier and Denali specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of peas and million pounds of lentils. Suppose that Glacier and Denali 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 6 million pounds of peas for 6 million pounds of lentils. This ratio of goods is known as the price of trade between Glacier and Denali. True or False: Without engaging in international trade, Glacier and Denali would not have been able to consume at the after-trade consumption bundles.Starting with the production frontiers for Nation 1 and Nation 2 shown in Figure 5.4, show graphically that even with a small difference in tastes in the two nations, Nation 1 would continue to have a comparative advantage in commodity X.Assume a world of two nations USA and The two nations produce machinery and agriculture. The USA can produce 160 units of machinery or 200 units of agriculture while Australia can produce 140 units of machinery or 50 units of agriculture, in the same time period. Define “absolute advantage” Which country, Australia or USA, has an absolute advantage in the production of agriculture and machinery? Explain the basis for your answer. Which country – Australia or USA - has a comparative advantage in production of machinery and agriculture? Define comparative advantage and explain how it applies in this example.