Microeconomics with Connect Access Card
20th Edition
ISBN: 9781259278556
Author: Campbell McConnell
Publisher: McGraw-Hill Education
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Question
Chapter 24, Problem 3P
To determine
The comparative advantage of countries.
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Assume that the comparative-cost ratios of two products— baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 2 cans tuna fish Tunata: 1 can baby formula ≡ 4 cans tuna fishIn what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula ≡ 2 1 2 cans tuna fish; (b) 1 can baby formula ≡ 1 can tuna fish; (c) 1 can baby formula ≡ 5 cans tuna fish?
Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata:
Canswicki: 1 can baby formula ≡ 5 cans tuna fish
Tunata: 1 can baby formula ≡ 7 cans tuna fish
a. In what product should each nation specialize?
Canswicki should produce _____- , and Tunata should produce _____
b. Would the following terms of trade be acceptable to both nations?
i. 1 can baby formula ≡ 4 cans tuna fish: yes or no
ii. 1 can baby formula ≡ 8 cans tuna fish: yes or no
iii. 1 can baby formula ≡ 5.5 cans tuna fish: yes or no
sugar, You have been asked to analyze the opportunity costs and comparative advantages to recommend an efficient trading relationship. Consider the production data provided. Prepare a brief report that: 3. Calculate and compare the opportunity costs of producing 1 unit of corn and 1 unit of sugar in each country. Which country has the lower opportunity cost for each good? 2. Determine which good each country has a comparative advantage in producing sugar and which one has a comparative advantage in producing corn. Explain your analysis. 3. Recommend a trading relationship that allows the countries to specialize based on comparative advantage. How would trade Improve economic efficiency? 4. Think about your own interests, skills, and opportunities. In what areas do you potentially have a comparative advantage over your peers or co-workers? Are there goods or services you could provide to others more efficiently? How could you maximize your advantages to achieve positive gains from trade…
Chapter 24 Solutions
Microeconomics with Connect Access Card
Ch. 24.2 - Prob. 1QQCh. 24.2 - Prob. 2QQCh. 24.2 - Prob. 3QQCh. 24.2 - Prob. 4QQCh. 24 - Prob. 1DQCh. 24 - Prob. 2DQCh. 24 - Prob. 3DQCh. 24 - Prob. 4DQCh. 24 - Prob. 5DQCh. 24 - Prob. 6DQ
Ch. 24 - Prob. 7DQCh. 24 - Prob. 8DQCh. 24 - Prob. 9DQCh. 24 - Prob. 10DQCh. 24 - Prob. 11DQCh. 24 - Prob. 12DQCh. 24 - Prob. 13DQCh. 24 - Prob. 14DQCh. 24 - Prob. 1RQCh. 24 - Prob. 2RQCh. 24 - Prob. 3RQCh. 24 - Prob. 4RQCh. 24 - Prob. 5RQCh. 24 - Prob. 6RQCh. 24 - Prob. 7RQCh. 24 - Prob. 8RQCh. 24 - Prob. 9RQCh. 24 - Prob. 10RQCh. 24 - Prob. 11RQCh. 24 - Prob. 12RQCh. 24 - Prob. 13RQCh. 24 - Prob. 1PCh. 24 - Prob. 2PCh. 24 - Prob. 3PCh. 24 - Prob. 4P
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- Suppose that the United States limits the amount of steel that can be imported from other countries. Using a PPF that puts units of steel on the horizontal axis and units of another good, such as food, on the vertical axis, explain how such a steel import quota will affect production of food and steel in the United States and alter our consumption possibilities. Will the quota make the United States better off as a whole? If not, will it make anyone in the United States better off? Explain. For 19.21, think of the PPF as that of steel produced in the United States and food produced in the United States (and not as total steel available for use in the United States)arrow_forwardAssume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. France’s unit labor requirement in apple production is 5, while in banana production it is 1. Suppose that Germany does not specialize in the production of the commodity in which it has a comparative advantage but it opens up for trade at the autarky production level. Compare the welfare of the country with the case when country specializes.arrow_forward1. Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. a) Which country has the comparative advantage in food? In fuel? Explain. b) Which good(s) should each country specialize in? c) Discuss the benefits of specialization for each country.arrow_forward
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