Microeconomics, Student Value Edition (6th Edition)
6th Edition
ISBN: 9780134125756
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 2, Problem 2.2.7PA
Subpart (a):
To determine
Subpart (b):
To determine
The basis of trade.
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Comparative advantage is an important concept to explain how economies work. Because of comparative advantage, it is possible for people to use their skills and time productively even if they are not the best at something. To help illustrate the usefulness of this concept:
Think of an example (work, family chores, school projects, etc.) where you might not have an absolute advantage at something, but you do have a comparative advantage. By this, I mean that you might not be the fastest or the best at a particular job. Other employees, family members, etc. may do the job quicker or better than you could. But their opportunity cost was high, meaning they had something more necessary for them to do, so it made sense for you to do this job.
Explain how this was an example of you having a comparative advantage but not an absolute advantage.
Did you (and the others in your example) specialize according to comparative advantage? What job(s) did you do? What did other people do?
Did this…
Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day.
Part 2
France
Germany
Wine (Bottles)
Cheese (Pounds)
Wine (Bottles)
Cheese (Pounds)
0
8
0
25
1
6
1
20
2
4
2
15
3
2
3
10
4
0
4
5
5
0
Part 3
Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese?
Part 4
A.
Neither has a comparative advantage producing wine or cheese.
B.
France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese.
C.
France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine.
D.
France has a comparative advantage producing wine and cheese.
E.
Germany has a comparative advantage producing wine and cheese.
Part 5
Suppose that France is…
Debra can make either 12 cakes or 16 cookies in 4 hours.Sam can make either 6 cakes or 12 cookies in 4 hours.
a) who has an absolute advantage at producing cakes and who has an absolute advantage at producing cookies? Briefly explain your answer.
b) if Debra and Sam concentrate on producing only the product in which they have a comparative advantage, how many cakes and how many cookies will they produce?
c) state debra's and Sam's opportunity costs of producing one cake and one cookie. Draw and place your answer in a table which looks something like this:
Cake. Cookie
Debra
sam
Chapter 2 Solutions
Microeconomics, Student Value Edition (6th 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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