ECON 1050 Study Guide - Midterm Guide: Comparative Advantage

• School: University of Guelph
• Department: Economics
• Course: ECON 1050
• Professor: Eveline Adomait

Document Summary

Questions in this review are from 2011 midterm - and are the main ones that show use of concepts micromidte m2011. Tax amount (shifts every point up by that amount) In this case, . 00: when oc is less, there is a comparative advantage. Always specialize in the good that has comparative advantage. To get oc of other good, take reciprocal. Oc is calculated by: amount of good x given up to get good y. Oc for vulcan: 4y for 2x, therefore for 1x they give up 2y. Oc for romulus: good x = 1. 5y, good y = 1/1. 5x. Romulus has comparative advantage for good x because oc is less (1. 5 is less than 2), and vulcan has ca for good y because oc is less (1/2 is less than 2/3: equilibrium is when. Dwl = difference in efficient price and price willing to pay. Without tariff, import amount was 32 million shirts (48-16).