Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 2, Problem 9WNG
To determine
Explain who has the
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Q)Suppose that country A using one unit of labor can produce 80 pounds of apples or 20 pounds of oranges, while country B using the same unit of labor can produce 40 pounds of apples or 15 pounds of oranges. This shows that:
Group of answer choices
If A and B trade, A should specialize in the production of oranges.
B has an absolute advantage in the production of apples.
B has a comparative advantage in the production of apples.
B has a comparative advantage in the production of oranges.
The table below shows the maximum quantities of two goods that each country can produce. If the countries follow the principle of comparative advantage, which of the following is a potential benefit of trade?
Vibranium (tons)
Gold (tons)
Wakanda
8 tons
2 tons
Zamunda
2 tons
1 ton
Group of answer choices
Trade can allow each country to increase consumption beyond its production possibilities frontier.
Trade can allow each country to shift its production possibilities frontier outward to higher levels of production.
Trade can allow each country to become less vulnerable to the actions of the other country.
All of these answers are correct.
Consider a hypothetical world with two countries: Country A and Country B. Each country has 45 workers, who produce cars and bicycles. If Country A shifts all its workers to one good, it can produce 1,350 cars or 2,520 bicycles. Under the same conditions, Country B can produce 1,710 cars or 2,880 bicycles. Therefore, Country B has an absolute advantage in producing both goods. Nevertheless, the two countries decide to trade, so each shift production to their areas of comparative advantage.
Determine which good Country A will specialize in. Then, calculate the quantity of this good the country will produce after trade if only 40 workers are involved. If necessary, round any intermediate calculations to two decimal places and your final answer to the nearest whole number.
Chapter 2 Solutions
Macroeconomics
Ch. 2.1 - Prob. 1STCh. 2.1 - Prob. 2STCh. 2.1 - Prob. 3STCh. 2.1 - Prob. 4STCh. 2 - Prob. 1QPCh. 2 - Prob. 2QPCh. 2 - Prob. 3QPCh. 2 - Prob. 4QPCh. 2 - Prob. 5QPCh. 2 - Prob. 6QP
Ch. 2 - Prob. 7QPCh. 2 - Prob. 8QPCh. 2 - Prob. 9QPCh. 2 - Prob. 10QPCh. 2 - Prob. 11QPCh. 2 - Prob. 12QPCh. 2 - Prob. 13QPCh. 2 - Prob. 1WNGCh. 2 - Prob. 2WNGCh. 2 - Prob. 3WNGCh. 2 - Prob. 4WNGCh. 2 - Prob. 5WNGCh. 2 - Prob. 6WNGCh. 2 - Prob. 7WNGCh. 2 - Prob. 8WNGCh. 2 - Prob. 9WNGCh. 2 - Prob. 10WNGCh. 2 - Prob. 11WNGCh. 2 - Prob. 12WNG
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- The principle of comparative advantage suggests that, if New York and Florida exchange taxi parts for oranges, each state will be made worse off.arrow_forwardWhen a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.arrow_forwardUse comparative advantage, two countries and two goods, to explain why every country can be better off from international trade.arrow_forward
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