Chapter 19: Q 18. (page 462)
Why does the United States not have an absolute
advantage in coffee?
Short Answer
Because of the climatic conditions, the United States does not have an absolute advantage in coffee.
Chapter 19: Q 18. (page 462)
Why does the United States not have an absolute
advantage in coffee?
Because of the climatic conditions, the United States does not have an absolute advantage in coffee.
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Get started for freeTable 19.15 shows how the average costs of production for semiconductors (the “chips” in computer memories) change as the quantity of semiconductors built at that factory increases.
a. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale?
b. If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors 50,000 semiconductors? 30,000 semiconductors?
c. Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
What is intra-industry trade?
What is absolute advantage? What is comparative advantage?
Why might intra-industry trade seem surprising
from the point of view of comparative advantage?
Can a nation’s comparative advantage change over
time? What factors would make it change?
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