EC239 Lecture Notes - Lecture 3: Absolute Advantage, Mineral Industry Of Colombia, Opportunity Cost

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pucecod803

12 Aug 2018

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For example, alc = 1 means that 1 hour of labor produces one pound of cheese in the home country: alw is the unit labor requirement for wine in the home country. Qw = l/alw when qc = 0: for example, suppose that the economy"s labor supply is 1,000 hours, the ppf equation alcqc + alwqw l becomes qc + 2qw 1,000. If the price of cheese relative to the price of wine equals the opportunity cost of producing cheese; then the wage equals the wage in wine: trade in the ricardian model. If the home country is more efficient in wine and cheese production, then it has an absolute advantage in all production: Its unit labour requirements for wine and cheese production are lower than those in the foreign country: when alc < a, whe(cid:396)e the (cid:862)*(cid:863) (cid:374)otates fo(cid:396)eig(cid:374) (cid:272)ou(cid:374)t(cid:396)y (cid:448)a(cid:396)ia(cid:271)les, it (cid:373)ea(cid:374)s that.

Related Questions

40) Consider two countries that can produce rice and other products. If neither country has an absolute advantage in the production of rice, A) there is no possibility that either country will import rice from the other. B) neither country can possibly have a comparative advantage in the production of rice. C) rice will still be traded as long as one of the countries has a comparative advantage in its production. D) the opportunity cost of producing rice must be identical in the two countries. E) then rice should not be produced.

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

a. it can produce that good at a lower opportunity cost.

b. it will not find trade beneficial because other countries won't have a comparative advantage in other goods.

c. it must also have an absolute advantage in the good.

orchidcrocodile608

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

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EC239 Lecture Notes - Lecture 3: Absolute Advantage, Mineral Industry Of Colombia, Opportunity Cost

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