Suppose that Slovenia and Luxembourg both produce boots and wheat. Slovenia's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 11 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Slovenia and Luxembourg consider trading wheat and boots with each other. Slovenia can gain from specialization and trade as long as it receives more than of boots for each bushel of wheat it exports to Luxembourg. Similarly, Luxembourg can gain from trade as long as of wheat for each pair of boots it exports to Slovenia. it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Luxembourg and Slovenia to gain from trade? Check all that apply. 1 pair of boots per bushel of wheat 2 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 15 pairs of boots per bushel of wheat

Suppose that Slovenia and Luxembourg both produce boots and wheat. Slovenia's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 11 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Slovenia and Luxembourg consider trading wheat and boots with each other. Slovenia can gain from specialization and trade as long as it receives more than of boots for each bushel of wheat it exports to Luxembourg. Similarly, Luxembourg can gain from trade as long as of wheat for each pair of boots it exports to Slovenia. it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Luxembourg and Slovenia to gain from trade? Check all that apply. 1 pair of boots per bushel of wheat 2 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 15 pairs of boots per bushel of wheat

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 5PA

See similar textbooks

Similar questions

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
21. According to David Ricardo, O A. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OB. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve O C. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O D. Countries should strive to develop their absolute advantage to benefit from trade with other countries
Suppose that France and Switzerland both produce fish and wine. France's opportunity cost of producing a bottle of wine is 5 pounds of fish while Switzerland's opportunity cost of producing a bottle of wine is 11 pounds of fish. By comparing the opportunity cost of producing wine in the two countries, you can tell thatFrance has a comparative advantage in the production of wine andSwitzerland has a comparative advantage in the production of fish. Suppose that France and Switzerland consider trading wine and fish with each other. France can gain from specialization and trade as long as it receives more than5 pounds of fish for each bottle of wine it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than5 bottles of wine for each pound of fish it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of fish) would allow both Switzerland and France to gain from…
If all countries follow a policy of free trade, economists predict that O a. each country will export goods at which it has a comparative advantage at producing and import goods at which it has a comparative disadvantage at producing Ob each country will export goods at which it has a comparative disadvantage at producing and import goods at which it has a comparative advantage at producing Oc there will be no trade between countries - that is, no international trade taking place Od rich countries will be made poorer by trade with poor countries O e. poor countries will be made even poorer by trade with rich countries
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate. Japan Korea Hours Needed to Make 1 Car 30 50 Airplane 150 150 Refer to Table 3-26. Japan has an absolute advantage in the production of O a. cars and a comparative advantage in the production of airplanes. b. neither good and a comparative advantage in the production of cars. Oc. neither good and a comparative advantage in the production of airplanes. O d. cars and a comparative advantage in the production of cars. Quantity Produced in 2400 Hours Cars 80 48 Airplanes 16 16
3. Absolute and comparative advantage Consider two neighboring island countries, Charisma and Fiatstan. Each has 72,000 labor hours available per week that it can use to produce corn, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of corn or 1 pair of jeans. Corn Jeans Country (Labor hours per bushel) (Labor hours per pair) Charisma 80 16 Fiatstan 24 12 has an absolute advantage in the production of corn, and has an absolute advantage in the production of jeans. Initially, suppose Charisma uses 54,000 hours of labor per week to produce corn and 18,000 hours per week to produce jeans, while Fiatstan uses 18,000 hours of labor per week to produce corn and 54,000 hours per week to produce jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries, each country consumes the amount of com and jeans it produces. Charisma's opportunity cost of producing 1 bushel of…
3. Absolute and comparative advantage Consider two neighboring island countries, Charisma and Fiatstan. Each has 72,000 labor hours available per week that it can use to produce corn, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of corn or 1 pair of jeans. Corn Jeans Country (Labor hours per bushel) (Labor hours per pair) Charisma 80 16 Fiatstan 24 12 has an absolute advantage in the production of corn, and has an absolute advantage in the production Neither country harisma uses 54,000 hours of labor per week to produce corn and 18,000 hours per week to produce jeans, while Fiatstan uses por per week to produce corn and 54,000 hours per week to produce jeans. Assume there are no other countries willing to trade sence of trade between these two countries, each country consumes the amount of corn and jeans it produces. Charisma Fiatstan
Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? Select one: O a. Traditional land line phones become more expensive. O b. Cellular phones become more popular. O. A technological advance makes cellular phone production less expensive. O d. The components used to produce cellular phones become more expensive.
If United States has a comparative advantage over Japan in the production of cars, then. O the opportunity cost of producing cars in United States is lower than in Japan. the opportunity cost of producing cars in United States is higher than in Japan. O only United States will gain from specialization and trade in cars between United States and Japan. O there are no gains from specialization and trade in cars between United States and Japan.
Suppose that Poland and Wales both produce ale and glass. Poland's opportunity cost of producing a pane of glass is 4 kegs of ale while Wales's opportunity cost of producing a pane of glass is 12 kegs of ale. By comparing the opportunity cost of producing glass in the two countries, you can tell thatWales has a comparative advantage in the production of glass andPoland has a comparative advantage in the production of ale. Suppose that Poland and Wales consider trading glass and ale with each other. Poland can gain from specialization and trade as long as it receives more than of ale for each pane of glass it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of glass for each keg of ale it exports to Poland. Based on your answer to the last question, which of the following prices of trade (that is, price of glass in terms of ale) would allow both Wales and Poland to gain from trade? Check all that apply. 8 kegs of…
7. Nations conduct international trade because: а. Some nations prefer to produce one thing while others produce other things. b. Trade enhances opportunities in all trading nations C. Interest rates are not identical in all trading nations. O d. Resources are not equally distributed among all trading nations.