When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Candonia and Sylvania. Both countries produce grain and tea, each initially (i.e., before specialization and trade) producing 12 million pounds of grain and 6 million pounds of tea, as indicated by the grey stars marked with the letter A. TEA (Millions of pounds) 32 28 24 16 12 8 4 0 0 PPF 4 Candonia 12 16 20 24 GRAIN (Millions of pounds) 28 32 (?) TEA (Millions of pounds) 32 28 24 20 16 12 8 4 0 0 PPF 4 I Sylvania 8 12 16 20 24 GRAIN (Millions of pounds) 28 32 ? Candonia has a comparative advantage in the production of production of , while Sylvania has a comparative advantage in the Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of tea and million pounds of grain. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 12 million pounds of grain for 12 million pounds of tea. This ratio of goods is known as the price of trade between Candonia and Sylvania. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes.

During the last 20 to 30 years, there have been a number of countries whose economies have experienced important economic expansion and development.  One group of countries has been labeled the BRIC countries and the other the VISTA countries.  Identify each of the nine countries and provide some insights about their economies and economic importance.   The theories of absolute and comparative advantage have been offered as an economic rationale for trade between and among regions and countries.  Compare and contrast the two concepts.  Which of the two do you think is more important for explaining the growth in global trade during the last 25 years?  Why”

Isabella and Antonio are auto mechanics. Isabella takes 8 hours to replace a clutch and 6 hours to replace a set of brakes. Antonio takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. State whether anyone has an absolute advantage at either task and, for each task, identify who has a comparative advantage. Instructions: Enter your responses rounded to two decimal places. The opportunity cost of replacing a set of brakes for Isabella is The opportunity cost of replacing a set of brakes for Antonio is has a comparative advantage in brake replacement. has a comparative advantage in clutch replacement. has an absolute advantage in brake replacement. has an absolute advantage in clutch replacement. Antonio Isabella Antonio Antonio

Which of the following is not true about the differences between comparative advantage and absolute advantages? While it is possible to achieve gains from trade if the country does not have a comparative advantage in the production of any goods, it is not possible to achieve gains from trade if the country does not have an absolute advantage in the production of any goods. Comparative advantage emphasizes the relative cost differences based on opportunity costs, while absolute advantage emphasizes absolute costs. In order to achieve gains from trade, specialization should be based on comparative advantage and not absolute advantage. In the two nation, two good model, we will always see that a country will have a comparative advantage in at least one good.

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Yosemite and Congares. Both countries produce corn and lentils, each initially (ie, before specialization and trade) producing 6 million pounds of corn and 3 million pounds of lentils, as indicated by the grey stars marked with the letter A. LENTILS (MEns of pounds 0 0 194 2 Yout 4 10 CORN (Mof pounds) 14 16 LENTILS (Mons of pounds 0 2 Yosemite has a comparative advantage in the production of production of comparative advantage. After specialization, the two countries can produce a total of comm. Conger L 10 12 COHN (Mof pounds) 14 16 (?) conn while Congaree has a comparative advantage in the -Suppose that Yosemite and Congaree specialize in the production…

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Candonia and Sylvania. Both countries produce lemons and coffee, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of coffee, as indicated by the grey stars marked with the letter A.   Candonia has a comparative advantage in the production of    , while Sylvania has a comparative advantage in the production of    . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of   million pounds of lemons and   million pounds of coffee.   Suppose that Candonia and…

Assume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. a) Graph both countries' PPF. Clearly state which trade theory you are using and explain the reason. Note that the shape of the production possibility frontier depends on the theory. b) Show relative autarky price in Germany and France country. c) Which country has a comparative advantage in the production of apple? Why?

Explain why Japan exports automobiles, while the U.S. exports aircraft? Use the prior definitions of absolute and comparative advantage to assist with your answer.

When a country speciallizes in the production of a good, this means that it can produce this good at a lower opportunity cost than Its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilitles frontlers (PPFS) for Maldonia and Sylvanla. Both countries produce lemons and coffee, each Initlally (that is, before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of coffee, as Indicated by grey points (star symbols) labeled point A. Maldonia Sylvania 48 48 42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 6 12 18 24 30 36 42 48 12 18 24 30 36 42 48 LEMONS (Milions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of while Sylvania has a comparative advantage in the . If each fully specializes (that is, produces only the good for which each has a comparative production of advantage), the most the…

The following graph shows a PPC for the imaginary country of Caldonia producing flyboats and time-stopping watches. Suppose a technological change improves production of time-stopping watches. So Caldonia can make more time-stopping watches with the same amount of resources, whereas production of time-stopping watches does not change. Adjust the vertical and horizontal intercepts of the PPC to show the effect of the the technological change on Caldonia's economy. (Hint: Do not move the intercept if the production of a good is not affected.) Quantity of time-stopping watches PPC Quantity of flyboats Before the technological change, point X was first box unattainable inefficient efficient second box unattainable inefficient efficient PPC and after the event, it is