ECON 110 Lecture Notes - Lecture 4: Market Price, Luxury Goods, Autarky

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azuregerbil16

4 Oct 2015

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But then why have we moved away from self-sufficiency over time. Absolute advantage if country one can produce more of a good than country two using the same resources then one has an absolute advantage over two in the production of the good in question. One is said to have absolute advantage over two in general if it has absolute advantage in all goods. That one has absolute advantage does not mean it has comparative advantage. Even if one country can do everything better, doesn"t mean they should or can everything. A person could be best at everything but not do everything, people specialize in doing things. Comparative advantage country one has comparative advantage in the production of a good whenever this good"s opportunity cost is lower than elsewhere, amongst potential trading partners. Specialize in the thing that costs me least. Globalization is rooted in specialization least opportunity cost. Before trade, can produce triangle graph (wheat vs. cloth)

Related Questions

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

Good Evening My Dear Cramster Family:

I have to answer if these questions are true or false and could you tell me if I am correct with the answers I have chosen? Thank you.

1. Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. (T)
2. Certain very talented people have a comparative advantage in everything they do. (T)
3. If a certain trade is good for one person it can't be good for the other one. (T)
4. If a certain trade is good for one person it is always good for a country, it must be good for everyone in the country. (F)

All the best,

Nettie

scarletscorpion75

Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below.

United States

Mexico

Hamburgersâ (in tons)	Tacosâ (in tons)	Hamburgersâ (in tons)	Tacosâ (in tons)
0	3636	0	3030
2020	2424	44	2020
4040	1212	88	1010
6060	0	1212	0

Which country has an absolute advantage in producingâ tacos?ââ

The United States

Which country has a comparative advantage in producingâ tacos?ââ

Mexico

Suppose the United States is currently producing

4040

tons of hamburgers and

1212

tons of tacos and Mexico is currently producing

tons of hamburgers and

1010

tons of tacos. If the United States and Mexico each specialize in producing only one goodâ (the good for which each has a comparativeâ advantage), then a total of

nothing

additionalâ ton(s) of hamburgers can be produced for the two countries combined â(enter a numeric response using anâ integer

salmonhornet160

ECON 110 Lecture Notes - Lecture 4: Market Price, Luxury Goods, Autarky

ECON 110 Full Course Notes

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