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The value of X to determine the gains from trade .

The value of X to determine the gains from trade .

Solution Summary: The author explains the value of X to determine the gains from trade.

Essentials of Economics (MindTap Course List)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN: 9781337091992

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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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 7PA

Subpart (a):

To determine

The value of X to determine the gains from trade.

Subpart (b):

To determine

The value of X to determine export quantity of cars and import quantity of wine.

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Chapter 3, Problem 6PA

Chapter 3, Problem 8PA

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Similar questions

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?
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?

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