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3. England and Scotland both produce sweaters and scones. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a) Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b) If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c) If a Scottish worker could produce only one sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.

3. England and Scotland both produce sweaters and scones. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a) Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b) If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c) If a Scottish worker could produce only one sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
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3. England and Scotland both produce sweaters and scones. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a) Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b) If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c) If a Scottish worker could produce only one sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.
Transcribed Image Text:3. England and Scotland both produce sweaters and scones. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a) Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b) If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c) If a Scottish worker could produce only one sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.
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