(millions of tons) Key Torland Leeland 20 15 10 5 5 10 15 20 25 Honey (millions of tons) Figure 2 Production possibility frontiers for two countries Figure 2 shows the production possibility frontiers for two countries, Torland and Leeland. Select one correct statement from the following options: Select one: O Neither country has a comparative advantage in the production of timber or honey. Torland has a comparative advantage in the production of timber and Leeland has a comparative advantage in honey. Leeland has a comparative advantage in the production of timber and Torland has a comparative advantage in honey. Both countries have a comparative advantage in the production of timber and honey.

(millions of tons) Key Torland Leeland 20 15 10 5 5 10 15 20 25 Honey (millions of tons) Figure 2 Production possibility frontiers for two countries Figure 2 shows the production possibility frontiers for two countries, Torland and Leeland. Select one correct statement from the following options: Select one: O Neither country has a comparative advantage in the production of timber or honey. Torland has a comparative advantage in the production of timber and Leeland has a comparative advantage in honey. Leeland has a comparative advantage in the production of timber and Torland has a comparative advantage in honey. Both countries have a comparative advantage in the production of timber and honey.

Name: Timber 25(millionsof tons)KeyTorlandLeeland2015105510152025Honey (mil
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Description: Timber 25(millionsof tons)KeyTorlandLeeland2015105510152025Honey (millions of tons)Figure 2 Production possibility frontiers for two countriesFigure 2 shows the production possibility frontiers for two countries, Torland and Leeland. Select onecorre

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 6PA

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Similar questions

In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
How does comparative advantage lead to gains from trade?
Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.