The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 20, Problem 7P

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The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Students have asked these similar questions

Use the following table to answer a)According to the opportunity cost associated with specialization of each product, if both countries decide to trade with each other (no protectionism), which product will England specialize? b)According to the opportunity cost associated with specialization of each product, if both countries decide to trade with each other (no protectionism), which product will Portugal specialize? c)Please calculate the opportunity cost of specializing in one single production (fill in the opportunity cost of each cell below).

Which of the following best explains the concept of "Comparative Advantage" in international trade? a) A country should produce goods in which it has an absolute advantage and trade for those where it does not. b) A country should only export goods and import nothing to maintain a positive trade balance. c) A country should specialize in the production of goods for which it has the lowest opportunity cost compared to other countries. d) A country should diversify its production across various sectors to avoid dependence on a single export commodity.

If Argentina imports manufacturing parts from Guatemala, and Guatemala imports delivery trucks from Argentina, how could you best describe the pattern of trade? Group of answer choices Guatemala must have an absolute advantage in producing manufacturing parts. The opportunity cost of producing delivery trucks is higher in Argentina than it is in Guatemala. Argentina is protecting its delivery truck production industry. The opportunity cost of producing manufacturing parts in Argentina is higher than it is in Guatemala.

Answer 2

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Answer 3

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Answer 4

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Answer 5

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

Answer 6

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

Answer 7

Chapter 20, Problem 7P

To determine

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

Answer 8

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Answer 9

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Answer 11

Ch. 20 - Prob. 1P Ch. 20 - Prob. 2P Ch. 20 - Prob. 3P Ch. 20 - Prob. 4P Ch. 20 - Prob. 5P Ch. 20 - Prob. 6P Ch. 20 - Prob. 7P Ch. 20 - Prob. 8P Ch. 20 - Prob. 9P Ch. 20 - Prob. 10P

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

Solution Summary: The author explains the effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times.

Concept explainers

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Chapter 20 Solutions

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

Solution Summary: The author explains the effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times.

Concept explainers

To explain: The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.

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Chapter 20 Solutions

To explain:

The effect on absolute and comparative advantage of two countries A and B if the productive capacity of A rises three times given country A has lowest opportunity cost of producing good X and country B has the lowest opportunity cost of producing good Y.