Answered: The outputs per laborer per day in the…

The outputs per laborer per day in the production of computers and autos in Nation 1 and in Nation 2 are given in the table below. Output per Laborer Nation 1 Nation 2 Autos 10 Computers 20

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 35P: Say that the average worker in the U.S. economy is eight times as productive as an average worker in...

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

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

Question

c) Will both nations gain if 1 autos can be exchanged for 20 computers?

d) Will both nations gain if 10 autos can be exchanged for 1 computers?

e) Will both nations gain if 10 autos can be exchanged for 20 computers?

f) What do your answers suggest about the effect of the terms of trade on the gains from trade for each nation and what a mutually beneficial terms of trade might be?

The outputs per laborer per day in the production of computers and autos in Nation 1 and in Nation 2 are given in the table below.
Output per Laborer
Nation 1
Nation 2
Autos
10
1
Computers
1
20

Definition Definition Any of the various net benefits or net gains that a country or trader makes by participating in international trade.

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