EC 307 Assignment #1 10_22_19.pdf - Zack Poitras EC 307 Assignment#1 Section A 4 Briefly give examples of absolute advantage(AA and comparative

EC 307 Assignment #1 10_22_19.pdf - Zack Poitras EC 307...

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Zack Poitras EC 307 10/22/19 Assignment #1 Section A 4. Briefly give examples of absolute advantage (AA) and comparative advantage (CA). An absolute advantage example is Colombia has climatic advantages for producing coffee. Thus, it can produce coffee at a lower cost than other countries. A comparative advantage example is if the US and Japan have an option to produce wheat or rice but not both. The US could produce 30 units of wheat or 10 units of rice and Japan can produce 15 units of wheat or 30 units of rice. Thus, the opportunity cost of wheat is 3 units of wheat for 1 unit of rice for the US is 0.5 units of wheat for each unit of rice for Japan. Thus, Japan has a comparative advantage in the production of rice since it has a lower opportunity cost. 5. Describe the differences between domestic finance and international finance. International finance is different from domestic finance in many aspects, first which is the most significant difference is foreign currency exposure. Also there are different political,
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