ESSENTIALS OF ECONOMICS
11th Edition
ISBN: 9781260225334
Author: SCHILLER
Publisher: RENT MCG
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Question
Chapter 1, Problem 6QFD
To determine
The reason behind North Korea not reducing military expenditure and putting more resources in food production. Also, ascertain the optimal mix of guns and butter.
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Students have asked these similar questions
The principle of comparative advantage suggests that, if New York and Florida exchange taxi parts for oranges, each state will be made worse off.
Suppose that an hour of work in Brazil can produce 1 pound of coffee or 4 pounds of sugar. In Colombia, an hour of work produces 2 pounds of coffee or 5 pounds of sugar.
Which country has the absolute advantage in coffee? In sugar?
Calculate the opportunity cost of each good in each country.
Which country has the comparative advantage in each good? Why?
What would be a mutually beneficial terms of trade?
Which country has a comparative advantage in the production of wine?
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Similar questions
- 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)?arrow_forwardWhich country has comparative advantage in the production of washing machines and automobiles?arrow_forwardUS and South Korea reached formal agreement on a plan to lift S. Korea’s long ban on US beef exports. What type of policy was S. Korea’s banning of US beef and why (other than fear of contaminated beef – mad cow disease) did S. Korea do this? Use offer-curve analysis to discuss the effects of this policy change. How does your answer change with your assumption as to whether S. Korea is a large or small country?arrow_forward
- The United States and Canada have the production possibilities curves shown above. It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 2 Corn? Why or why not?arrow_forwardWhy is alliance very important in the Chinese economic agenda?arrow_forwardSuppose that an hour of work in Germany can produce 5 pastries or 4 sausages. In Denmark, an hour of work produces 4 pastries or 3 sausages. Which country has the absolute advantage in pastries? In sausages? Calculate the opportunity cost of each good in each country. Which country has the comparative advantage in each good? Why? What would be a mutually beneficial terms of trade?arrow_forward
- There are two countries: Country A and Country B. These countries have the same amount of resources and both produce the same two goods, pencils and markers. The opportunity cost of pencils in Country A is ½ markers per pencil and the opportunity cost of pencils in Country B is 4 markers per pencil. Which country has a comparative advantage in each good? Group of answer choices Country A has a comparative advantage in both goods Country B has a comparative advantage in both goods Country A has a comparative advantage in markers; Country B has a comparative advantage in pencils Country A has a comparative advantage in pencils; Country B has a comparative advantage in markersarrow_forwardAn economy is said to have a comparative advantage in the production of a good if it can: produce that good with more resources than another economy. produce that good with a higher opportunity cost than another economy. produce that good outside its production possibilities curve. produce the good at a lower opportunity cost than another economy.arrow_forward
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