Explain the concepts of Absolute Advantage and Comparative Advantage
1.Explain the concepts of Absolute Advantage and Comparative Advantage. Provide 2 examples of comparative advantage in use in real-life.
2.Give the information below identify which country has an absolute advantage and comparative advantage. Which country should produce which products. What are the gains from trade for the world economy? (hint you will need to find autarky output) To receive credit all work must be shown.
|Beef||100 cows||70 cows||25 cows||50 cows|
|Lumber||1000 board feet||950 board feet||500 board feet||600 board feet|
3.Explain the Factor Endowment Model (FEM). Provide 2 examples of FEM in use in real-life.
4.Compare Comparative Advantage to FEM
5.What is the Leontief Paradox? Provide 4 examples of the paradox in real-life
6.Explain why intra-industry is an important aspect of studying international trade
7.Is globalization a positive or negative development in the world? Explain your reasoning
Absolute advantage can be described as the ability of a country to produce a good or a service more efficiently when compared to the other countries. The ability to produce a good or service more efficiently can be measured in terms of a low marginal cost. If the country has the absolute advantage……………………….