Microeconomics
13th Edition
ISBN: 9781337671590
Author: Arnold
Publisher: Cengage
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Question
Chapter 20, Problem 1WNG
(a)
To determine
The good in which Country C has a
(b)
To determine
The good in which Country I has a comparative advantage.
(c)
To determine
The favorable set of terms of trade.
(d)
To determine
The production and consumption of goods X and Y before and after specialization.
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Using the data in the accompanying table, answer the following questions:
a. For which good does Canada have a comparative advantage?b. For which good does Italy have a comparative advantage? c. What might be a set of favorable terms of trade for the two countries?d. Prove that both countries would be better off in the specialization-trade case than in the no-specialization-no-trade case.
Which goods will a nation typically import?
a. those goods in which the nation has an absolute advantage
b.those goods in which the nation has a comparative advantage
c. those goods in which other nations have an absolute advantage
d. those goods in which other nations have a comparative advantage
***
Which of the following statements about production and trade is FALSE?
1. If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that
good.
II. Rich countries will generally have the comparative advantage in the production of all goods.
III. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in
the production of that good.
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Specialization and Trade Q4
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I, II and III.
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