Chapter 33: Q.9 (page 803)
Under what conditions does comparative advantage lead to gains from trade?
When efforts are focused on product they specialize in and producing at a lower opportunity cost for other countries.
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What are the two main sources of economic gains from intra-industry trade?
In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?
Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain
In Exercise 33.31, is there an “ask” where Venezuelans may say “no thank you” to trading with Canada?
You just got a job in Washington, D.C. You move into an apartment with some acquaintances. All your roommates, however, are slackers and do not clean up after themselves. You, on the other hand, can clean faster than each of them. You determine that you are 70% faster at dishes and 10% faster with vacuuming. All of these tasks have to be done daily. Which jobs should you assign to your roommates to get the most free time overall? Assume you have the same number of hours to devote to cleaning. Now, since you are faster, you seem to get done quicker than your roommate. What sorts of problems may this create? Can you imagine a trade-related analogy to this problem?
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