Answered: "The Structure of US Trade between…

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 7PA

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Question

"The Structure of US Trade between 1821-1930 (Table 20.1) identifies the changing mix of goods produced by the United States through import and export percentages. Which concept describes changes in economic production based on what an economies can best produce?

A) Comparative Advantage

B) The Dacist vin-yang "dance of opposites"

C) Maidow's Hierarchy of Needs

D) The Tragedy of the Commons

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

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