Economics, Student Value Edition (7th Edition)
7th Edition
ISBN: 9780134739229
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 2, Problem 2.2.13PA
To determine
Impact on importing goods that have the comparative advantage .
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Which country has a comparative advantage in the production of wine?
An economy is said to have a comparative advantage in the production of a good if it can:
produce that good with more resources than another economy.
produce that good with a higher opportunity cost than another economy.
produce that good outside its production possibilities curve.
produce the good at a lower opportunity cost than another economy.
What is Production Efficiency and Inefficiency in economics? Explain with the help of a diagram. When does a country have a comparative advantage over producing a good? Explain with examples.
Chapter 2 Solutions
Economics, Student Value Edition (7th Edition)
Ch. 2 - Prob. 1TCCh. 2 - Prob. 2TCCh. 2 - Prob. 2.1.1RQCh. 2 - Prob. 2.1.2RQCh. 2 - Prob. 2.1.3RQCh. 2 - Prob. 2.1.4PACh. 2 - Prob. 2.1.5PACh. 2 - Prob. 2.1.6PACh. 2 - Prob. 2.1.7PACh. 2 - Prob. 2.1.8PA
Ch. 2 - Prob. 2.1.9PACh. 2 - Prob. 2.1.10PACh. 2 - Prob. 2.1.11PACh. 2 - Prob. 2.1.12PACh. 2 - Prob. 2.1.13PACh. 2 - Prob. 2.1.14PACh. 2 - Prob. 2.2.1RQCh. 2 - Prob. 2.2.2RQCh. 2 - Prob. 2.2.3PACh. 2 - Prob. 2.2.4PACh. 2 - Prob. 2.2.5PACh. 2 - Prob. 2.2.6PACh. 2 - Prob. 2.2.7PACh. 2 - Prob. 2.2.8PACh. 2 - Prob. 2.2.9PACh. 2 - Prob. 2.2.10PACh. 2 - Prob. 2.2.11PACh. 2 - Prob. 2.2.12PACh. 2 - Prob. 2.2.13PACh. 2 - Prob. 2.2.14PACh. 2 - Prob. 2.2.15PACh. 2 - Prob. 2.3.1RQCh. 2 - Prob. 2.3.2RQCh. 2 - Prob. 2.3.3RQCh. 2 - Prob. 2.3.4RQCh. 2 - Prob. 2.3.5RQCh. 2 - Prob. 2.3.6RQCh. 2 - Prob. 2.3.7PACh. 2 - Prob. 2.3.8PACh. 2 - Prob. 2.3.9PACh. 2 - Prob. 2.3.10PACh. 2 - Prob. 2.3.11PACh. 2 - Prob. 2.3.12PACh. 2 - Prob. 2.3.13PACh. 2 - Prob. 2.3.14PACh. 2 - Prob. 2.3.15PACh. 2 - Prob. 2.3.16PA
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- A producer has a comparative advantage in a good if it is the lowest opportunity cost producer of this good, even if it is not the most efficient producer of this good. True Falsearrow_forwardWhat is opportunity cost of a T-shirt in Mexico? Show all your calculations. What is opportunity cost of a T-shirt in Egypt? Show all your calculations. Which country has comparative advantage in production of T-shirts? How do you know? Explain your answer.arrow_forwardThe following statement is true about comparative advantage. The principle was developed by the British Economist Henry Ford. A country with fewer environmental regulations and lower wages has a comparative advantage in modern manufacturing. Silicon Valley has a comparative advantage in high-technology due to a local abundance of silicon dioxide. The principle of comparative advantage is used to justify self-sufficiency and local production of goods.arrow_forward
- In the past, comparative advantages have sometimes shifted from one nation to another. What factors do you think caused these shifts? Why? Was there anything a nation could have done to prevent an advantage from shifting to another nation?arrow_forwardAccording to the theory of comparative advantage, countries gain from trade because ___a. trade makes firms behave more competitively, reducing their market power. ___b. all firms can take advantage of cheap labor. ___c. output per worker in each firm increases. ___d. world output can rise when each country specializes in what it does relatively best. ___e. every country has an absolute advantage in producing something.arrow_forwardAssume there are two countries, Argentina and Brazil, which produce two goods, corn and wine. Assume that land is specific to corn, capital is specific to wine, and labor is free to move between the two industries. Assume that Brazil has a comparative advantage in corn, and Argentina has a comparative in wine. Brazil and Argentina sign a free trade agreement, and we want to study the consequences of this trade agreement.arrow_forward
- If there is trade, which of the following is most likely? A. A country’s consumption possibilities frontier can be outside its production possibilities frontier. B. A country will produce a greater variety of goods and services to trade. C. A country is worse off because it becomes dependent on other countries. D. A country will experience a lower unemployment rate.arrow_forwardIf two parties trade based on comparative advantage and both gain, in what range must the price of the trade lie? Give an examplearrow_forwardThe concept of _________ __________ was introduced by economist David Ricardo, and it posits that, because each state differs in its ability to produce specific products, each state should produce and export that which it can produce most efficiently and import goods that other states can produce more efficiently.arrow_forward
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