ECON 22060 Lecture Notes - Lecture 6: Absolute Advantage, Comparative Advantage, North American Free Trade Agreement
15 views2 pages
5 Nov 2019
School
Department
Course
Professor
Get access
Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers
Related Documents
Related Questions
The following table shows the output produced by one unit of labour in each country:
Ā |
Wine |
Clothing |
Portugal |
1/80 bl per hr |
1/90 yd per hr |
England |
1/120 bl per hr |
1/100 yd per hr |
- Which country has a comparative advantage in wine? In clothing? Why?
- Suppose that Portugal has 18000 labour hours available and England has 10000 labour hours available. Further assume that, in autarky (closed to the rest of the world), Portugal uses 11000 hours to produce wine, and the rest to produce clothing, while England uses 8000 hours to produce wine. What are the outputs without specialization and trade (number of units)?
Ā |
Wine |
Clothing |
Portugal |
bl |
yd |
England |
bl |
yd |
Total |
bl |
yd |
- Suppose that the nations now alter their production patterns and engage in complete specialization in the goods in which they have a comparative advantage (the nations use all their hours for the production of one good). What are the outputs? How much is gained from specialization?
Ā |
Wine |
Clothing |
Portugal |
bl |
yd |
England |
bl |
yd |
Gains |
Ā | Ā |