Using the same amount of resources, the United States and Canada can both produce lumberjack shirts and lumberjack boots, as shown in the production possibilities frontiers in the figure to the right. Canada has a comparative advantage in producing lumberjack boots. The United States has a comparative advantage in producing lumberjack shirts. Does either country have an absolute advantage in producing both goods? OA. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more shirts. B. Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. OC. The United States has an absolute advantage in both goods because it can produce more boots and more shirts. OD. Canada has an absolute advantage in both goods because it can produce more boots and more shirts. O E. Both countries have an absolute advantage in both goods because they both produce boots and shirts. Suppose initially that the United States is consuming 12 boots and 2 shirts and Canada is consuming 4 boots and 8 shirts, as indicated in the figure. Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In particular, suppose the United States trades Canada half of its production for half of what Canada produces. The United States will have 4 additional shirt(s) after the trade (enter a numeric response using an integer) and 14 additional boot(s). At the same time, Canada will be able to consume 8 additional shirt(s) as a result of the trade and 6 additional boot(s).
Using the same amount of resources, the United States and Canada can both produce lumberjack shirts and lumberjack boots, as shown in the production possibilities frontiers in the figure to the right. Canada has a comparative advantage in producing lumberjack boots. The United States has a comparative advantage in producing lumberjack shirts. Does either country have an absolute advantage in producing both goods? OA. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more shirts. B. Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. OC. The United States has an absolute advantage in both goods because it can produce more boots and more shirts. OD. Canada has an absolute advantage in both goods because it can produce more boots and more shirts. O E. Both countries have an absolute advantage in both goods because they both produce boots and shirts. Suppose initially that the United States is consuming 12 boots and 2 shirts and Canada is consuming 4 boots and 8 shirts, as indicated in the figure. Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In particular, suppose the United States trades Canada half of its production for half of what Canada produces. The United States will have 4 additional shirt(s) after the trade (enter a numeric response using an integer) and 14 additional boot(s). At the same time, Canada will be able to consume 8 additional shirt(s) as a result of the trade and 6 additional boot(s).
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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