ECON 1P91 Lecture Notes - Lecture 10: Chale, Canter And Gallop, Absolute Advantage

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ceriseturtle322

20 May 2016

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ECON 1P91 Full Course Notes

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Specialize in one or a few goods and trade. A country (person) has an absolute advantage in all goods if it has greater productivity than another country in the production of all goods. Canada has an absolute advantage in the production of all good s than chile. Produces more output / unit of input. Both number of bushels of green beans and grapes produced / day is greater in canada. Still gains available when a country or persons trades with another country or person. A country (person) has a comparative advantage in producing a good if it can produce that good at a lower opportunity cost than any other country. Magnitude of the slope of ppf measure opportunity cost of one good in term of the other. A country"s production and consumption possibilities are identical. Slope of cpl common to both countries. Market demand = domestic demand + foreign demand. Market supply = domestic supply + foreign supply.

Related Questions

The fundamental force driving international trade is comparative:

A. Advantage: a country exports those goods that have high prices

B. Abundance: the country that produces more than it needs exports the good

C. Advantage: the country with the lower opportunity cost of production exports the good

D. Cost: a country trades with other countries that produce cheaper goods

goldcheetah814

1. The law of comparative advantage says that:

A. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good.

B. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good

C. the individual with the lowest opportunity cost of producing a particular good should produce it

D. comparative advantage exists only when one person has an absolute advantage in the production of two goods

2. A country has an absolute advantage in the production of a good if that country:

A. can produce good using fewer resources than another country would require

B. has the lowest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

C. has the greatest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

D. has the lowest opportunity cost of producing the good and can produce it with the fewest resources

3. A production possibilities frontier can shift outward for all of the following reasons except:

A. a larger workforce

B. a decrease in the size of the labor force

C. an increase in the skills of the labor force

D. an improvement in technology

byzantiumshark504

If a country has a comparative advantage in the production of a good:

(i) it will not find trade beneficial because another country(ies) won't have a comparative advantage in other goods.

(ii) it must also have an absolute advantage in the good.

(iii) it can produce that good at a lower opportunity cost.

ceruleanlizard145

ECON 1P91 Lecture Notes - Lecture 10: Chale, Canter And Gallop, Absolute Advantage

ECON 1P91 Full Course Notes

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