Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 19, Problem 4E
a)
To determine
The price of a bottle of beer in each economy if there is no trade.
b)
To determine
The export of beer and chips in each country.
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Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. If these two countries specialize in trade according to their comparative advantage, which of the following would not be true?
A) Grease will specialize in and export fish
B) more of each good can be consumed in both countries
C) Greece will benefit from trade more than Germany
D) Some individuals in each country will be hurt
Can you help me with this
Suppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat.
a. If each state specialized in their respective comparative advantage:
Iowa would produce million bushels of corn and million bushels of wheat.
Nebraska would produce million bushels of wheat and million bushels of corn.
Now assume Nebraska trades 120 million bushels of wheat for 120 million bushels of corn. With specialization and this trade, Nebraska will end up with million bushels of corn and million bushels of wheat, while Iowa will end up with million bushels of corn and million bushels of wheat.
b.…
Which of the following best explains the concept of "Comparative Advantage" in international trade? a) A country should produce goods
in which it has an absolute advantage and trade for those where it does not. b) A country should only export goods and import nothing
to maintain a positive trade balance. c) A country should specialize in the production of goods for which it has the lowest opportunity
cost compared to other countries. d) A country should diversify its production across various sectors to avoid dependence on a single
export commodity.
Chapter 19 Solutions
Macroeconomics (Fourth Edition)
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