EBK MACROECONOMICS FOR TODAY
9th Edition
ISBN: 8220101425966
Author: Tucker
Publisher: CENGAGE L
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Chapter 18, Problem 4SQ
To determine
The comparative cost advantage theory.
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If France is said to have an absolute advantage over Mexico in the production of wheat, this means that, given the sameĀ resources,
Mexico must have an absolute advantage in producing some good other than wheat.
Ā
a. France can produce more wheat than Mexico.
b. France has an absolute advantage in all goods that are complements to wheat.
c. France must have an absolute advantage over Mexico in producing all goods.
d. Mexico must have a comparative advantage over France in the production of wheat.
1. Determine which country has a comparative advantage in each good.
2. If Country A and Country B each have 100 units of labour, calculate the maximum production of each good for both countries.
3. In the absence of trade, Country B uses 20% of its total labour units to produce steel and the rest to produce oil. Country A uses 60% of its total labour units to produce steel and the rest to produce oil. Calculate how many tonnes of steel and oil can be produced by both countries.
4. Both countries agree that one tonne of steel can be exchanged for one tonne of oil. Calculate the gains after trade is allowed if Country A consumes 30 tonnes of oil domestically.
Argentina can produce 2 pounds of coffee OR 1 bottle of wine. Brazil can produce 5 pounds of coffee OR 1 bottle of wine.
Which country has a comparative advantage in the production of wine?Ā Ā
a. both Argentina and Brazil.
b. Argentina.
c. neither Argentina nor Brazil.
d. Brazil.
Chapter 18 Solutions
EBK MACROECONOMICS FOR TODAY
Ch. 18.4 - Prob. 1GECh. 18.6 - Prob. 1GECh. 18 - Prob. 1SQPCh. 18 - Prob. 2SQPCh. 18 - Prob. 3SQPCh. 18 - Prob. 4SQPCh. 18 - Prob. 5SQPCh. 18 - Prob. 6SQPCh. 18 - Prob. 7SQPCh. 18 - Prob. 8SQP
Ch. 18 - Prob. 9SQPCh. 18 - Prob. 10SQPCh. 18 - Prob. 11SQPCh. 18 - Prob. 1SQCh. 18 - Prob. 2SQCh. 18 - Prob. 3SQCh. 18 - Prob. 4SQCh. 18 - Prob. 5SQCh. 18 - Prob. 6SQCh. 18 - Prob. 7SQCh. 18 - Prob. 8SQCh. 18 - Prob. 9SQCh. 18 - Prob. 10SQCh. 18 - Prob. 11SQCh. 18 - Prob. 12SQCh. 18 - Prob. 13SQCh. 18 - Prob. 14SQCh. 18 - Prob. 15SQCh. 18 - Prob. 16SQCh. 18 - Prob. 17SQCh. 18 - Prob. 18SQCh. 18 - Prob. 19SQCh. 18 - Prob. 20SQ
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- Figure 3-3 Ice cream and cones are measured in kilograms. Cones Ice Cream Cones Jerry Ice Cream Refer to Figure 3-3. What does each of the two producers have a comparative or absolute advantage in? a. Ben has an absolute advantage in neither good, and Jerry has a comparative advantage in ice cream. .b. Ben has an absolute advantage in ice cream, and Jerry has a comparative advantage in cones. X c. Ben has an absolute advantage in cones, and Jerry has a comparative advantage in ice cream. d. Ben has an absolute advantage in both goods, and Jerry has a comparative advantage in cones.arrow_forwardComputers wheat Country A 10 4 Country B 6. 3 Table shows the number of hours of labor required to produce 1 unit of output of computers and wheat in country A and B. a. Country. . has a comparative advantage in computers. b. Country. . has a comparative advantage in wheat. Price ratio( computers/wheat) should be between C. and for free trade. . ...... ...........arrow_forwardWhich of the following statements regarding absolute and comparative advantage is true? A. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. B. A nation can have a comparative advantage in the production of every good, but not an absolute advantage. C. A nation cannot have an absolute advantage in the production of every good. D. A nation cannot have a comparative advantage in the production of every good.arrow_forward
- Rice Gadget US 14 Thailand 16 3. a. Absolute advantage: Determine which country has the absolute advantage for Rice and Gadget b. Comparative advantage: Determine what products that should be produced for each countryarrow_forwardRefer to Table 3-5. Which country has a comparative advantage in each product? a. Canada has a comparative advantage in airplanes, and Japan has a comparative advantage in neither good. b. Canada has a comparative advantage in cars, and Japan has a comparative advantage in airplanes. c. Canada has a comparative advantage in airplanes, and Japan has a comparative advantage in cars. d. Canada has a comparative advantage in neither good, and Japan has a comparative advantage in cars.arrow_forward1. Consider the countries of Canada and Mexico. In one month, Canada can produce a maximum of 150 wheat or 200 barley. Mexico can also maximize production of 150 wheat, but their maximum barley output is 150. a. Assuming each country devotes half of its resources to growing each crop, calculate the production level of each crop in each country and overall production.Ā b. Determine comparative advantage in each and show how you found this.Ā c. Calculate production levels in each country of each crop under specialization and also overall production. d. How much of each crop was gained by specialization?Ā 2. Using cheddar cheese, explain in two sentences or fewer the following:Ā a. Income Effectb. Substitution Effectc. Law of Diminishing Marginal Returnsarrow_forward
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