Meagan, a contractor, is hired to install cabinets in a new home and has to decide whether to build the cabinets herself or purchase them from a local cabinet shop. a. Meagan should build the cabinets herself only if the cabinet maker has a comparative advantage in the production of cabinets. -she has a comparative advantage in the production of cabinets. -she has an absolute advantage in the production of cabinets. -the cabinet maker has an absolute advantage in the production of cabinets.   b. If the cabinet maker is foreign rather than local, the answer to part a -does change regardless of trade costs. -does not change regardless of trade costs. -does change as long as trade costs are negligible. -does not change as long as trade costs are negligible.

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Comparative Advantage: Suppose that the United States and Switzerland produce bicycles and chocolate bars: Bicycles per worker/year Chocolate Bars per worker/year 10,000 20,000 Switzerland 1 United States 5 a. The United States has an absolute advantage in both bicycles and chocolate bars, but which country has a comparative advantage producing bicycles? Chocolate bars? b. Assume there are 10,000 workers. Draw the production possibilities frontier for the United States prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on the U.S. production possibilities frontier (put bicycles on the x-axis and millions of chocolate bars on the y-axis). c. Assume there are 10,000 workers. Draw the production possibilities frontier for Switzerland prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on Switzerland's…

21. According to David Ricardo, O A. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OB. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve O C. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O D. Countries should strive to develop their absolute advantage to benefit from trade with other countries

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I don't understand the second part of this homework. If Frankie and Johnny completely specialize according to comparative advantage, what will happen to the amount of eggs and milk? I have the opportunity cost calculated to understand who should do what in this case. But what will I do to that number?

In one month, Manal can knit 2 sweaters or 4 scarves. In one month, Tamara can knit 1 sweater or 3 scarves. Given this information, which of the following statements is TRUE? O Manal has a comparative advantage in knitting scarves but not in knitting sweaters O Manal has a comparative advantage in knitting neither sweaters nor scarves O Manal has a comparative advantage in knitting both sweaters and scarves O Manal has a comparative advantage in knitting sweaters but not in knitting scarves

Suppose that Spain and Greece both produce wine and olive oil. The following table shows combinations of the goods that each country can produce in a week (in thousands of liters). Spain Greece Wine Olive Oil Wine Olive Oil 0 16 0 30 1 12 1 24 2 8 2 18 3 4 3 12 4 0 4 6 -- -- 5 0   a. Who has a comparative advantage in producing wine? Who has a comparative advantage in producing olive oil? Explain  b. Suppose that Spain is currently producing 1000 liters of wine and 12000 liters of olive oil per week and Greece is currently producing 3000 liters of wine and 12000 liters of olive oil per week. Demonstrate that Spain and Greece can both be better off if they specialise in producing only one good and then engage in trade.

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2. Answer letter c and D.