2. Refer to the following table. Assume there are two workers in Chile and three workers in theUnited StatesChileUnited StatesBottles of wine produced perhourPounds of rice produced perhour| Comparative advantage75510??(a) Determine the pretrade relative priece of wine in Chile and the United States.(b) Given your answer in part (a), which country has a comparative advantage in the productionof rice?(c) What is the lowest international relative price of wine Chile is willing to accept in order toengage in trade with the United States? Briefly explain why.

2. Refer to the following table. Assume there are two workers in Chile and three workers in the United States Chile United States Bottles of wine produced per hour Pounds of rice produced per hour Comparative advantage 5 10 (a) Determine the pretrade relative price of wine in Chile and the United States. (b) Given your answer in part (a), which country has a comparative advantage in the production of rice? (c) What is the lowest international relative price of wine Chile is willing to accept in order to engage in trade with the United States? Briefly explain why.

2. Refer to the following table. Assume there are two workers in Chile and three workers in the United States Chile United States Bottles of wine produced per hour Pounds of rice produced per hour Comparative advantage 5 10 (a) Determine the pretrade relative price of wine in Chile and the United States. (b) Given your answer in part (a), which country has a comparative advantage in the production of rice? (c) What is the lowest international relative price of wine Chile is willing to accept in order to engage in trade with the United States? Briefly explain why.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...

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Similar questions

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
How does comparative advantage lead to gains from trade?
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Under what conditions does comparative advantage lead to gains from trade?
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.