GMS 724 Study Guide - Midterm Guide: Absolute Advantage, Comparative Advantage
11 Nov 2018
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In costa rica, assume that it takes 4 units to produce a ton of coffee and. In the united states, it takes 20 units per ton of coffee and 5 units per ton of wheat. Assumptions for costa rica: 100 units of resources available, 10 units to produce a ton of wheat, 4 units to produce a ton of coffee, uses half of total resources per product when there is not foreign trade. Assumptions for united states: 100 units of resources available, 5 units to produce a ton of wheat, 20 units to produce a ton of coffee, uses half of total resources per product where there is no foreign trade. Comparative advantage by analogy: although this theory may seem initially in congruous, an analogy should clarify its logic. Imagine that the best physician in two also happens to be the best medical administrator.
