2. If Home has a comparative advantage in the production of good 1, then when the economy in Foreign. opens the relative price of good 1 in Home and a. increases, increases b. increase, decreases c. decreases, increases d. decreases, decreases

2. If Home has a comparative advantage in the production of good 1, then when the economy in Foreign. opens the relative price of good 1 in Home and a. increases, increases b. increase, decreases c. decreases, increases d. decreases, decreases

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 2CQQ

See similar textbooks

Related questions

Q: Of all the points in the diagram,. Good X is highest. a) Point A represents a situation where the…

A: The Production Possibility Frontier is a graphical representation that illustrates the various…

Q: Which of the macroeconomic policies listed below is contractionary and will help reduce the rate of…

A: Macroeconomic policy refers to the deliberate actions and strategies implemented by a government or…

Q: Problem 14-03 algo Suppose the Federal Reserve decided to buy $25 billion worth of government…

A: The open market operations is one of the most used monetary tool used by the Federal Reserve. It…

Q: Which of the following is not a characteristic of financial markets? a.Money is exchanged in…

A: A financial market is a platform or environment where various financial instruments, such as stocks,…

Q: 6. The equation for a demand curve is given by P = 100 - Qa Calculate elasticity at Qd = 20. (Use Q₁…

A: The price elasticity of demand is defined as the change in the consumption level of a product which…

Q: Draw a supply and demand curve in which you label price axis, quantity axis, supply curve, demand…

A: Demand refers to the units/ quantity that a buyer desires and able to buy at a given market price.…

Q: Elijah and Aneesha are farmers. Each one owns an 18-acre plot of land. The following table shows the…

A: Absolute advantage describes a situation where a country, individual, or entity can produce a…

Q: The Prescott Welding Company needs to acquire a new lift truck for transporting its final product to…

A: Present worth refers to the discounted value of all future cash flows .

Q: How should Improvements and Betterments made to a Condominium Unit by its owner be insured? OA)…

A: Unit Owners Comprehensive Policy provides coverage for various aspects related to a condominium…

Q: Q12 In the following game, all payoffs are listed with Player A's payoffs listed first and Player…

A: A dominated strategy provides an individual with the worst possible outcome even with the presence…

Q: Gasoline prices have been and will continue to be a major issue for the economy. From the start of…

A: Change in demand refers to the shifts in the quantity of a product that producers are willing and…

Q: When someone owes you money in Canada, what steps are you allowed to take in order to collect the…

A: It can be defined as the financial liability that one individual or any entity owes to another…

Q: Why is having knowledge of graphing and basic algebra or essential for your understanding of…

A: Understanding macroeconomics requires a solid grasp of graphing and basic algebra. These…

Q: a. Indicate whether goods Y and Z are substitutes or complements for good X. Good Y is: (Click to…

A: Note: Since you have posted a question with multiple sub parts, we will provide the solution only to…

Q: The importance of Jollibee Food Corporation in economic globalization.

A: Economic globalization implies the increasing interconnectedness and integration of economies across…

Q: 9. For the payoff matrix below, consider a sequential version of the game in which Player 2 moves…

A: A Nash equilibrium is a set of strategies where no player has an incentive to unilaterally deviate…

Q: Which of the following is/are the characteristic(s) of a household? [i]: It represents all the…

A: The household sector comprises all individuals or groups of people who live together under a same…

Q: players receive based on their choices of actions {H, L}. Refer to this table for questions 1-2…

A: Game theory describes the rational agents in the society taking decisions based on their strategies.…

Q: QUES ION 6 The United Kingdom is Australia's fifth-largest export market. Australia predominately…

A: Comparative Advantages- The United Kingdom exports passenger vehicles to Australia, indicating that…

Q: (i) Explain what is meant by a Eurodollar. ( (ii) What is meant by a "warrant" feature on a…

A: A Eurodollar is a type of offshore deposit denominated in U.S. dollars but held in banks outside of…

Q: Which of the following is a labor resource?

A: Which of the following is a labor resource?a. silicon (sand) used to make computer chipsb. a…

Q: Describe the use of the law of supply or the law of demand in an activity in which you were involved…

A: The answer to the given question is from a generalized economic perspective.The Law of Demand is…

Q: Suppose the market for a good is described by the following equations: Qa60-3P and Qs = -20+5P 1. If…

A: Equilibrium price: The price at which the quantity demanded equals the quantity supplied in a…

Q: 2) Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or…

A: "As per our policy, we can provide you with the solution to the first three sub-parts. Kindly repost…

Q: Suppose that the resource base in Country X can produce either 100 units of alpha or 300 units of…

A: Opportunity cost reflects the idea that resources are scarce, and choosing one option over another…

Q: Concerned about the welfare of people, the Government restricts consumption of good 2 to a maximum…

A: What is the budget constraint for the consumer given the rule from government?a) b) c) none of the…

Q: When we move along the demand curve only quantity is held constant. only price is held constant. all…

A: The demand curve represents the relation between the price of goods and the quantity that the…

Q: In 3-4 pages in APA style making sure to provide citations and references with peer reviewed…

A: Affordable Care Act (ACA):The Affordable care Act, often referred to as Obamacare, is a…

Q: The Regulations under the RIB Act require an insurance broker to provide evidence that insurance has…

A: The Regulations under the RIB Act require insurance brokers to provide evidence of placed insurance.…

Q: Jose sells his economics textbook from last semester, which he could sell back to the bookstore for…

A: Consumer preferences gauge the satisfaction or happiness derived by a buyer from enjoying the…

Q: Suppose the demand in the rich country is P=100-Q and supply is P=2Q. Draw this demand and supply…

A: Welfare under autarky refers to the economic well-being or living standards of a country that…

Q: for step 2, wouldn't ep be (p/500-p) instead of 50? Also for step 3 how did you get 25<p?

A: Ed=−1Elasticity of demand measures the responsiveness of quantity demanded when the price of a good…

Q: There are four consumers willing to pay (WTP) the following amounts for haircuts: Gloria: $35 Jack:…

A: Willingness to pay (WTP) is the maximum price at or below which a consumer is willing to buy one…

Q: A) What is the arc price elastic of demand for health care consumers in Japan (using only this…

A: Note: Since you have posted multiple questions, we will provide the solution only to the first…

Q: In a certain region, there are four major healthcare providers: A HealthCare, B CarePlus, C MedWell,…

A: The Herfindahl-Hirschman Index (HHI) is a measure of market concentration.It is calculated by…

Q: To show how nations can share unequally in the benefits from trade: (a) Sketch a figure showing the…

A: Trade describes the exchange of goods, services, or resources between individuals, businesses, or…

Q: Discuss thoroughly the graph attached and explain thoroughly how the Philippines performed from 2010…

A: Undernourishment is defined by the UN as a condition in which people do not have enough calories to…

Q: 1 Canvas Exhibit: AD-AS Shifts Price level, P P2 P₁ P3 F I I G C 7 B Y E D AS₂ AS₁ AS3 AD₂ AD₁ AD;…

A: The aggregate demand curve shows the quantity of output that households, firms, the government, and…

Q: In your opinion, is it better to focus on assessing and developing employees' weaknesses or to focus…

A: An employee’s strengths are the qualities and skills that they possess that enable them to perform…

Q: 2.11 Known demand for a product (in hundreds) for the last eight periods is listed here. Period…

A: (a) To forecast the demand for period 9 using the three-month moving average, we take the average of…

Q: Problem 5 Consider an exchange economy with two people: Will and Bob; and two goods: apples and…

A: Utility functions are tools to represent the utility derived by consumers from different…

Q: Using the table below, construct an Engel Curve for each beer type. Income Group Beer Type Domestic…

A: The Engel curve illustrates how changes in income affect consumer demand for a certain commodity.…

Q: If a machine will be operated according to a varying hours, 1200 hours in the first year, 2100 hours…

A: To calculate the annual equivalent saving or cost per machine hour, you can use the concept of…

Q: Given: (x is number of items) Demand function: d(x) = 8160 – 0.3x² Supply function: s(x) = 3x Find…

A: Consumer Surplus: The monetary difference between the price that consumers are willing to pay for a…

Q: 2. (a) Starting from the IS equation, derive an expression for the aggregate demand curve.

A: Disclaimer- “Since you have asked multiple questions, we will solve the first question for you as…

Q: 3. A firm has a cost function of the form: C(2₁. 22. q) = w25 25 25 25 ² where Z₁...2 are factor…

A: ***Since the student has posted multiple subparts, so the expert has solved the first three…

Q: Graphically demonstrate how the following economic events influence (ceteris paribus) the…

A: As the existing firms are making strong profits in the market, it attracts new firms who start…

Q: We talked in class about practice performance being a poor predictor of learning. Some types of…

A: Learning is a cognitive process through which individuals acquire new knowledge, skills, behaviors,…

Q: (3-2a MT) A chemical factory is located next to a farm. Airborne emissions from the chemical factory…

A: Negative externality is the phenomenon in which one party imposes additional emvironment cost on the…

Q: Which method allows us to find the steady state in a Solow economy? By... a. Removing the time…

A: In the realm of economic analysis, determining the steady state of a Solow economy is pivotal. The…

Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

2. If Home has a comparative advantage in the production of good 1, then when the economy
opens the relative price of good 1
in Home and
in Foreign.
a. increases, increases
b. increase, decreases
c. decreases, increases
d. decreases, decreases
3. Assume Home has a comparative advantage in the production of good 1. When the economy
opens and begins trading with Foreign, which of the following occurs?
a. the relative price of good 1 increases
b. industry 1 expand and industry 2 contracts
c. the real wage in units of good 2 increases
d. all of the above

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define the given problem:

VIEW

Step 2: Determine the correct answer in blank area:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
Does intra-industry trade contradict the theory of comparative advantage?