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c. Explain what you understand by the term absolute advantage. Based on the theory of absolute advantage, which country do you think should specialize in Corn production and why do you think so?

c. Explain what you understand by the term absolute advantage. Based on the theory of absolute advantage, which country do you think should specialize in Corn production and why do you think so?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter34: Globalization And Protectionism
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6. Suppose Vanuatu and Oman are countries that both produce coconuts and corn which are sold for the same price. Below are various combinations the countries can produce using the same amount of capital and labour. Vanuatu Coconut (Million bags) Production and consumption before trade (A) 50 Consumption available after trade (B) 200 Oman Coconut Corn Corn (Million bags) (Million bags) (Million bags) 100 850 d. 100 110 110 1,000 Table 1. A Table showing production in Vanuatu and Oman a. Using the information above, draw a PPF (Production Possibilities Frontiers) curve for Oman showing the production and consumption without trade and the production and consumption with trade (points A and B). b. Explain the term comparative advantage. Based on the information above, calculate which country has a comparative advantage in coconut production and explain why you think the country has a comparative advantage in coconut production. c. Explain what you understand by the term absolute advantage. Based on the theory of absolute advantage, which country do you think should specialize in Corn production and why do you think so? Firms and Countries are encouraged by economists to specialize. What is the importance of specialization in macroeconomics? e. Although Oman produces a lot of Corn, there is a shortage of corn products in the country due to excess exports. Explain 2 policies that the Oman government can put in place to address this issue. f. Recently, the governments of Vanuatu and Oman decided to improve trade between the two countries. Explain 2 ways they can do this.
Transcribed Image Text:6. Suppose Vanuatu and Oman are countries that both produce coconuts and corn which are sold for the same price. Below are various combinations the countries can produce using the same amount of capital and labour. Vanuatu Coconut (Million bags) Production and consumption before trade (A) 50 Consumption available after trade (B) 200 Oman Coconut Corn Corn (Million bags) (Million bags) (Million bags) 100 850 d. 100 110 110 1,000 Table 1. A Table showing production in Vanuatu and Oman a. Using the information above, draw a PPF (Production Possibilities Frontiers) curve for Oman showing the production and consumption without trade and the production and consumption with trade (points A and B). b. Explain the term comparative advantage. Based on the information above, calculate which country has a comparative advantage in coconut production and explain why you think the country has a comparative advantage in coconut production. c. Explain what you understand by the term absolute advantage. Based on the theory of absolute advantage, which country do you think should specialize in Corn production and why do you think so? Firms and Countries are encouraged by economists to specialize. What is the importance of specialization in macroeconomics? e. Although Oman produces a lot of Corn, there is a shortage of corn products in the country due to excess exports. Explain 2 policies that the Oman government can put in place to address this issue. f. Recently, the governments of Vanuatu and Oman decided to improve trade between the two countries. Explain 2 ways they can do this.
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