Trade helps to specialize based on comparative advantage .

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Answer 1

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

(b):

To determine

Trade helps to consume variety of products.

(c):

To determine

Trade increases the competition in the market.

(d):

To determine

Trade helps to enjoy the returns to scale.

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Evaluate the following statements: a. Developed countries have nothing to gain by trading with developing countries. b. Developed countries get all of the gains from trade when they trade with developing countries because they can dictate their prices to these countries. c. The United States can no longer compete in world markets because American wages are too high.

Each country should specialize in producing that good for which it a. has a comparative advantage b. has an absolute advantage c. it has a higher opportunity cost

According to the theory of comparative advantage, countries gain from trade because ___a. trade makes firms behave more competitively, reducing their market power. ___b. all firms can take advantage of cheap labor. ___c. output per worker in each firm increases. ___d. world output can rise when each country specializes in what it does relatively best. ___e. every country has an absolute advantage in producing something.

Answer 2

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

(b):

To determine

Trade helps to consume variety of products.

(c):

To determine

Trade increases the competition in the market.

(d):

To determine

Trade helps to enjoy the returns to scale.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

(b):

To determine

Trade helps to consume variety of products.

(c):

To determine

Trade increases the competition in the market.

(d):

To determine

Trade helps to enjoy the returns to scale.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

(b):

To determine

Trade helps to consume variety of products.

(c):

To determine

Trade increases the competition in the market.

(d):

To determine

Trade helps to enjoy the returns to scale.

Expert Solution & Answer

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Answer 5

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

(b):

To determine

Trade helps to consume variety of products.

(c):

To determine

Trade increases the competition in the market.

(d):

To determine

Trade helps to enjoy the returns to scale.

Answer 6

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

Answer 7

Chapter 19, Problem 6SP

(a):

To determine

Trade helps to specialize based on comparative advantage.

Answer 8

(b):

To determine

Trade helps to consume variety of products.

Answer 9

(b):

To determine

Trade helps to consume variety of products.

Answer 10

(c):

To determine

Trade increases the competition in the market.

Answer 11

(c):

To determine

Trade increases the competition in the market.

Answer 12

(d):

To determine

Trade helps to enjoy the returns to scale.

Answer 13

(d):

To determine

Trade helps to enjoy the returns to scale.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 19 - Prob. 1QR Ch. 19 - Prob. 2QR Ch. 19 - Prob. 3QR Ch. 19 - Prob. 4QR Ch. 19 - Prob. 5QR Ch. 19 - Prob. 1SP Ch. 19 - Prob. 2SP Ch. 19 - Prob. 3SP Ch. 19 - Prob. 4SP Ch. 19 - Prob. 5SP

Trade helps to specialize based on comparative advantage .

Solution Summary: The author explains that trade helps to specialize based on comparative advantage. The trade theory states that the countries should specialize in the production of goods and services.

Trade helps to specialize based on comparative advantage.

Trade helps to consume variety of products.

Trade increases the competition in the market.

Trade helps to enjoy the returns to scale.

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Chapter 19 Solutions