Countries trade goods just like the food trucks do in the simulation. Did the food trucks benefit from specialization and trade? How can the United States benefit from specialization and trade? Provide examples from the textbook. Research and share a current news article on international trade that supports the argument economists make in favor of free trade agreements (FTAS). In what ways is the article supportive of FTAs?

Countries trade goods just like the food trucks do in the simulation. Did the food trucks benefit from specialization and trade? How can the United States benefit from specialization and trade? Provide examples from the textbook. Research and share a current news article on international trade that supports the argument economists make in favor of free trade agreements (FTAS). In what ways is the article supportive of FTAs?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter2: Production Possibilities Frontier Framework

Section: Chapter Questions

Problem 3WNG

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Similar questions

How does comparative advantage lead to gains from trade?
Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Does intra-industry trade contradict the theory of comparative advantage?