(a)
Identify the price and quantity of a container of roses without international trade.
(a)
Explanation of Solution
Table-1 shows the data of quantity demanded and quantity supplied as follows:
According to the equilibrium condition, the number of the container of roses is produced where the quantity demanded is equal to the quantity supplied and the price is charged at the corresponding
(b)
Identify the
(b)
Explanation of Solution
According to Table-1, the price charged by Country U is $175 per container. The wholesalers brought roses at auction from Countries A and H for $125 per container. The cost of production of roses in Country U is higher than that of Countries A and H. Therefore, the rest of the world has a comparative advantage in producing roses than Country U.
Comparative advantage: Comparative advantage is a term in economics that explains the ability of a country to produce an output or production of goods and services in an economy at a minimum
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