Principles of Microeconomics California Edition 2nd Edition
2nd Edition
ISBN: 9780393622089
Author: Dirk Mateer, Lee Coppock
Publisher: W. W. Norton
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Question
Chapter 1, Problem 4SP
To determine
Check whether the countries are better off or worse off by trade with example.
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Students have asked these similar questions
Suppose that Country A and Country B can produce the following numbers of Chairs
and Printers per worker per day. Which of the following is true?
Country A Country B
25
Chairs
10
Printers
4
Country B has Absolute Advantage (in both products), and Country A has
Comparative Advantage in Printers.
Country A has Absolute Advantage (in both products), and Country B has
Comparative Advantage in Printers.
Country A has Absolute Advantage (in both products), and Country A has
Comparative Advantage in Printers.
Country B has Absolute Advantage (in both products), and Country B has
Comparative Advantage in Printers.
Suppose that a tailor in Cottonland can sew either 40 cotton shirts or 10 silk shirts per week, and a tailor in Silkland can sew either 18 cotton shirts or 6 silk shirts per week. There are 20 tailors in Cottonland and 20 tailors is Silkland. Answer the following questions:
2.1. What country has the absolute advantage in sewing cotton shirts? What country has the absolute advantage in sewing silk shirts?
2.2. What country has the comparative advantage in sewing cotton shirts? What country has the comparative advantage in sewing silk shirts? Numerically
2.3. If the two countries specialize and produce according to the comparative advantage criterion, how much in terms of cotton and silk shirts each country will produce per week? Fill in the table below with your calculations.
Cotton shirts/per week
Silk shirts/per week
Cottonland
Silkland
When countries specialize based on their comparative advantage and trade with each other, how does it lead to gains from trade for both countries (even if one country has an absolute advantage in both goods)?
Chapter 1 Solutions
Principles of Microeconomics California Edition 2nd Edition
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