CAS EC 101 Lecture Notes - Lecture 3: Absolute Advantage, Comparative Advantage

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virkon421

19 Feb 2023

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Boston University

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Economics

Course

CAS EC 101

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Specialization with trade can allow for both sides benefiting from trade, greater efficiency, leads to points on the outside of ppf. Comparative advantage - lower opc of producing a type of item, person specializing in producing, producing what they produce best with lowest opc. Benefits from specialization and trade depend on comparative advantage and not absolute advantage potatoes on high) Terms of trade: price of trade must lie between their opcs. Potatoes : meat < x < meat(person that is exporting potatoes on low, importing.

Related Questions

6. Coheed: (a) Has an absolute advantage and a comparative advantage in producing apple pies. (b) Has an absolute advantage in nothing and a comparative advantage in producing apple pies. (c) Does not have an absolute advantage or a comparative advantage in producing anything. (d) Has an absolute advantage in nothing and a comparative advantage in producing books.

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

Suppose only two people on the frontier: Susy and Bob, and two goods: rifles and shelter. If Susy has the comparative advantage in producing rifles, and Bob has the absolute advantage in producing both goods, then: a. No gains from trade can be made and Bob should produce in isolation. b. Bob has a comparative advantage in rifles as well. c. Bod has the comparative advantage in producing shelter. d. Susy should specialize in creating shelter. Explain definitions of comparative advantage and absolute advantage while giving answer please... I believe it is A

emeraldplatypus928

CAS EC 101 Lecture Notes - Lecture 3: Absolute Advantage, Comparative Advantage

CAS EC 101 Full Course Notes

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