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Business Economics EBK INTERNATIONAL ECONOMICS

Gains from trade for a country.

Gains from trade for a country.

Solution Summary: The author explains that international trade is made on the basis of comparative advantage, which is the ability of the economy to produce at the least opportunity cost of production.

EBK INTERNATIONAL ECONOMICS

EBK INTERNATIONAL ECONOMICS

7th Edition

ISBN: 9780134523873

Author: Gerber

Publisher: YUZU

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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 3, Problem 3SQ

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Gains from trade for a country.

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Chapter 3, Problem 2SQ

Chapter 3, Problem 4SQ

Chapter 3 Solutions

EBK INTERNATIONAL ECONOMICS

Ch. 3 - Prob. 1SQ Ch. 3 - Prob. 2SQ Ch. 3 - Prob. 3SQ Ch. 3 - Prob. 4SQ Ch. 3 - Prob. 5SQ Ch. 3 - Prob. 6SQ

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You just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?

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