Definitions
What is absolute advantage
Ability of a producer to produce a product or service at a lower absolute cost per unit
Which one is the more important factor in determining mutually gainful trade potentials: absolute advantage or comparative advantage?
Comparative advantage
this country has the comparative advantage for shirts? Given the data below:
US. Canada
Shirts 15, 9
Soda 40, 38
USA
What is Free Trade?
Trade without restrictions
What is the opportunity cost in the context of production?
The cost is measured by the missed opportunity of producing second best thing as resources have already been spent to produce the first-best thing.
Considering between states of Kentucky and Florida, which state has absolute advantage in operating ocean cruises?
Florida
this country has the comparative advantage in chocolate chocolate(lbs) clogs(pairs)
Germany 600, 95 Netherlands 350, 275
What is Germany?
What does the WTO do?
Regulates the international rules of trade
What are the factors of production?
Land, Labor, Capital, Entrepreneurship
If the Production Possibilities Frontier curve of Country A intersects both vertical and horizontal axes at a higher level that those for country B and if horizontal axis and vertical axis represent the production of loafs of breads and tractors respectively then____.
this country has the comparative advantage in gummy bears gummy bears(lbs) faygo root beer(liters)
Canada 70, 100 Guatemala 80, 40
What is Canada?
What does the IMF do?
Promotes economic stability and helps or lends to countries in need.
Exchange rate is the rate at which one currency will be exchanged for another currency.
A country with more labor endowment will have an absolute advantage in ____
labor intensive industries
Argentina has the comparative advantage in this product
Flags, Toilet Paper
Argentina 40, 50 Puerto Rico 50, 40
What is toilet paper?
What does the World bank do?
Primarily designed to assist developing nations in growing economically.
It refers to the sale of a product at a price below its domestic price or cost of production.
Which country has an absolute advantage in coffee production: Bangladesh or Brazil?
Brazil
This country has the comparative advantage for shirts books, shirts
U.S. 60, 30 Guatemala 100, 10
What is U.S.?
What are the five forms of trade barriers?
Tariffs, import quotas, embargoes, buy-national regulations, and exchange controls.