To Explain:
Despite the absence of
Concept Introduction:
Explanation of Solution
Comparative advantage is not the only basis of trade. There could be other reasons for which trade can take place between two countries. These include decreasing costs or increasing returns, difference in tastes or demand, economies of scale and technological changes. Therefore, even when two countries do not have comparative advantage based on any of the stated reasons, opportunities for trade can arise and they may experience gain from trade.
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Chapter 19 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
- 34. To obtain good A in which one does not have a comparative advantage, it is better to acquire it by "indirect production" – producing good B, in which one does have a comparative advantage, and trading it for good A. True False Falsearrow_forwardSuppose a country has an overall balance of trade so that exports of goods and services equal imports of goods and services. Does that imply that the country has balanced trade with each of its trading partners?arrow_forwardHow can there be any economic gains for a country from both importing and exporting the same good, like cars?arrow_forward
- 11. Question 11 options: ----------------Measures the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production.arrow_forwardSubject: OM | International Business and Trade Question: 3.How do you think the transition to a normal economy in Lebanon, after the war in 2006, would differ from the experiences of European countries after World War II? (Cite citations if needed)arrow_forward1-According to Adam Smith, an inquiry into the nature and causes of wealth of nation in which economics is primarily concerned with wealth. In this premise, how do you apply the concepts of wealth of nation in producing a product of the concerned in Niger?arrow_forward
- QUESTION 10 Why do countries trade? International law requires them to. They have similar comparative advantages. They have identical comparative advantages. They have different comparative advantages. They have identical absolute advantages.arrow_forward4. Notice that there is little mention of the U.S. importing food or agriculture. What does that say about America’s farmers? 5. Why do so many of Mexico’s and Canada’s exports go to the U.S? What problems could that create for their economies?arrow_forward7. Discuss some advantages of exporting? Question 7 options:arrow_forward
- At one point Canadas GDP was 1,800 billion and its exports were 542 billion. What was Canadas export ratio at this time?arrow_forward17- What is the outcome of globalization? a. All of the options b. Downsizing c. Buy outs d. Mergersarrow_forward5. The price of trade Suppose that Ireland and Norway both produce boots and shoes. Ireland's opportunity cost of producing a pair of shoes is 4 pairs of boots while Norway's opportunity cost of producing a pair of shoes is 11 pairs of boots. By comparing the opportunity cost of producing shoes in the two countries, you can tell that has a comparative advantage in the production of shoes and has a comparative advantage in the production of boots. Suppose that Ireland and Norway consider trading shoes and boots with each other. Ireland can gain from specialization and trade as long as it receives more than of boots for each pair of shoes it exports to Norway. Similarly, Norway can gain from trade as long as it receives more than of shoes for each pair of boots it exports to Ireland. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of boots) would allow both Norway and Ireland to gain…arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax