MICROECONOMICS CUSTOM SMC >BI<
21st Edition
ISBN: 9781307055320
Author: McConnell
Publisher: MCG/CREATE
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Chapter 26.2, Problem 4QQ
To determine
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Exercise: production per unit of labour:
US: Wheat 300, Beef 100
Argentina: Wheat 20, Beef 20
a. Does either country have an absolute advantage in the production of wheat or beef? Explain
b. What is the opportunity cost of wheat in each country?
c. What is the opportunity cost of beef in each country?
d. Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.
Q) When a country has a comparative advantage in producing a certain good,
A: the country should import that good.
B: the country should produce just enough of that good for its own consumption.
C:the country’s opportunity cost of that good is high relative to other countries’ opportunity costs of that same good.
D: then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontier
a.) Looking at the graphs, which nation has a stronger preference for 'Y'? Explain.
b.) Looking at the graphs, which nation has comparative advantage in producing good 'X'. Why?
c.) What do the points A and A' on the graphs represent? Explain.
Chapter 26 Solutions
MICROECONOMICS CUSTOM SMC >BI<
Ch. 26.2 - Prob. 1QQCh. 26.2 - Prob. 2QQCh. 26.2 - Prob. 3QQCh. 26.2 - Prob. 4QQCh. 26 - Prob. 1DQCh. 26 - Prob. 2DQCh. 26 - Prob. 3DQCh. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Prob. 6DQ
Ch. 26 - Prob. 7DQCh. 26 - Prob. 8DQCh. 26 - Prob. 9DQCh. 26 - Prob. 10DQCh. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Prob. 13DQCh. 26 - Prob. 14DQCh. 26 - Prob. 1RQCh. 26 - Prob. 2RQCh. 26 - Prob. 3RQCh. 26 - Prob. 4RQCh. 26 - Prob. 5RQCh. 26 - Prob. 6RQCh. 26 - Prob. 7RQCh. 26 - Prob. 8RQCh. 26 - Prob. 9RQCh. 26 - Prob. 10RQCh. 26 - Prob. 11RQCh. 26 - Prob. 12RQCh. 26 - Prob. 13RQCh. 26 - Prob. 1PCh. 26 - Prob. 2PCh. 26 - Prob. 3PCh. 26 - Prob. 4P
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- 1. Production Possibilities Frontier 2. Trade. How does specialization and trade make individuals and countries wealthier? 3.Think about why countries benefit from foreign trade. Also consider a scenario where Country A is more productive than Country B at producing all goods. Why is it still in Country A’s best interest to trade with Country B?arrow_forwardQ)choose correct option, When a country has a comparative advantage in producing a certain good, A: the country should import that good. B: the country should produce just enough of that good for its own consumption. C:the country’s opportunity cost of that good is high relative to other countries’ opportunity costs of that same good. D: then specializing in the production of that good and trading for other goods could allow that country to consume at a point beyond its production possibilities frontierarrow_forwardWhich country has comparative advantage in the production of food? Explain. See attached.arrow_forward
- Table 1 shows the production possibilities for the USA and Mexico. Table 1 Output per hour worked Country Computers Shoes USA 3 6 pairs Mexico 1 3 Based on Table 1, which country or countries has an absolute advantage and a comparative advantage in shoes? Group of answer choices Mexico has an absolute and comparative advantage in shoes. The United States has a comparative advantage, and Mexico has an absolute advantage in shoes. Mexico has a comparative advantage, and the United States has an absolute advantage in shoes. There is not enough information to tell.arrow_forwardInternational Trade (Chapter 20) QUESTIONS Suppose that in the absence of trade, the U.S. price for bicycles was higher than the world price for bicycles. Would allowing international trade, mean that the U.S. would import or export bicycles? Who in the U.S. would benefit and who would lose with a free trade policy, and would the gains be greater than the losses? Note: please do not give a copy & paste answer from Chegg. or course heroarrow_forwardwhen romania opened itself to international trade, the price of corn in romania almost doubled. does romania has comparative advantage in the production of corn? is romania an exporter or an importer of corn romania consumers of corn will be better off or worse off? how about the producers ? are there any gains from international trade?arrow_forward
- The United States and Canada have the production possibilities curves shown above. It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 3 Corn? Why or why not? Show your work.arrow_forwardWhat theory attempts to explain why Japan is strong in automobiles, Switzerland in precision instruments and pharmaceuticals, and Germany in chemicals? Select one: a. Absolute advantage b. New trade theory c. National competitive advantage d. Comparative advantagearrow_forward
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