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    Terms of Trade Practice PDF

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    lamis
    1. The document discusses absolute and comparative advantages in production across different countries and commodities. It provides examples of the labor hours or resources required to produce goods in two locations and determines if trade would be beneficial. 2. Absolute advantage is having the lowest opportunity costs or requiring the least resources to produce one unit of a good. Comparative advantage is having a lower opportunity cost of production than the trading partner. 3. Six examples are provided comparing production quantities and labor hours required for pairs of goods in different locations. For each example, it determines if trade could occur and what could be traded based on the principles of absolute and comparative advantage.

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    Terms of Trade Practice PDF

    Uploaded by

    lamis
    87 views2 pages
    1. The document discusses absolute and comparative advantages in production across different countries and commodities. It provides examples of the labor hours or resources required to produce goods in two locations and determines if trade would be beneficial. 2. Absolute advantage is having the lowest opportunity costs or requiring the least resources to produce one unit of a good. Comparative advantage is having a lower opportunity cost of production than the trading partner. 3. Six examples are provided comparing production quantities and labor hours required for pairs of goods in different locations. For each example, it determines if trade could occur and what could be traded based on the principles of absolute and comparative advantage.

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    1. The document discusses absolute and comparative advantages in production across different countries and commodities. It provides examples of the labor hours or resources required to produce goods in two locations and determines if trade would be beneficial. 2. Absolute advantage is having the lowest opportunity costs or requiring the least resources to produce one unit of a good. Comparative advantage is having a lower opportunity cost of production than the trading partner. 3. Six examples are provided comparing production quantities and labor hours required for pairs of goods in different locations. For each example, it determines if trade could occur and what could be traded based on the principles of absolute and comparative advantage.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    87 views2 pages

    Terms of Trade Practice PDF

    Uploaded by

    lamis
    1. The document discusses absolute and comparative advantages in production across different countries and commodities. It provides examples of the labor hours or resources required to produce goods in two locations and determines if trade would be beneficial. 2. Absolute advantage is having the lowest opportunity costs or requiring the least resources to produce one unit of a good. Comparative advantage is having a lower opportunity cost of production than the trading partner. 3. Six examples are provided comparing production quantities and labor hours required for pairs of goods in different locations. For each example, it determines if trade could occur and what could be traded based on the principles of absolute and comparative advantage.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Absolute (AA) and Comparative (CA) Advantages: Problems

    Absolute: Make the most (if using similar resources). Comparative Outputs: Lowest opportunity costs
    Comparative Inputs: Least resources or effort needed to make one unit
    #1. Hats Bicycles
    Delta 1200 300
    Epsilon 600 300
    AA Hats = AA Bicycles = CA Hats = CA Bicycles =
    Trade can occur: _____________ hats for ________________ bicycles

    #2. Fish Wheat


    Alpha 10 labor hours 20 labor hours
    Beta 20 labor hours 80 labor hours
    AA Fish = AA Wheat = CA Fish = CA Wheat =

    Trade can occur: _____________ fish for ________________ wheat

    #3. Cloth Food


    Gamma 10 2
    Kappa 10 1
    AA Cloth = AA Food = CA Cloth = CA Food =
    Trade can occur: _____________ cloth for _______________ food

    #4. Cars Tractors


    Lambda 30 10
    Mu 20 40
    AA Cars = AA Tractors = CA Cars = CA Tractors =

    Trade can occur: ____________ cars for ______________ tractors

    Watches
    40 Omega

    10 Phi

    10 20 Radios

    AA Watches = AA Radios = CA Watches = CA Radios =


    Trade can occur: __________ watches for _____________ radios

    #6 Minutes needed to produce 1 Minutes needed to produce 1 bushel of wheat


    radio
    Ted 20 minutes 5 minutes
    Nancy 30 minutes 15 minutes
    AA Radios AA Wheat CA Radios CA Wheat
    Trade can occur: __________ radios for ___________wheat

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