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AK_Chapter_03 - million cars 4 a Pat's is 2.5 litres of...

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1 Chapter 3 Questions for Review 1. Absolute advantage is about productivities, comparative advantage is about opportunity costs. 2. Many examples are possible. 3. Comparative advantage. 4. Export. 5. Restrictions on trade prevent gains from comparative advantage. Problems and Applications 1. To produce a kilo of meat farmer (rancher) gives up the opportunity to produce 4 (2) kilos of potatoes. 2. a. A straight line with intercepts 100 (econ) and 250 (socio). b. 40 pages of econ. 3. a. Workers needed to make: One Car One Tonne of Grain Canada 1/4 1/10 Japan 1/4 1/5 b. Straight lines with intercepts 400 (cars) and 500 (grain) for Japan; 400 (cars) and 1000 (grain) for Canada. c. 2½ tonnes of grain. 2/5 car. 1¼ tonnes of grain. 4/5 car. d. Neither. Canada. e. Japan. Canada. f. Canada – 200 million cars and 500 million tonnes of grain. Japan – 200 million cars and 250 million tonnes of grain. g. Make Canada produce more than 500 million tonnes of grain, and Japan more than 200
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Unformatted text preview: million cars. 4. a. Pat's is 2.5 litres of root beer; Kris' is 10/3 litres of root beer. Pat. Pat. b. Pat. c. 10/3 of a litre of root beer. 2.5 litres of root beer. 5. a. 15 tonnes of wheat. 1/15 of a car. b. Straight line with intercepts 20 (cars) and 300 (wheat). 150 million tonnes. c. 200 million tonnes of wheat + 10 million cars. Canada should accept. 6. Yes. Comparative advantage. 2 7. a. England. England. b. Sweaters. c. Yes. Yes. Comparative advantage. 8. a. 1 red sweater. 2 red sweaters. b. Montreal – absolute advantage in both. Toronto – comparative advantage in red; Montreal – comparative advantage in blue. c. Montreal – blue; Toronto – red. d. Between 1 and 2 red sweaters. 9. a. All goods can be produced with fewer worker hours. b. Comparative advantage (lower marginal opportunity cost). c. Yes. 10. a. True. b. False. c. False....
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AK_Chapter_03 - million cars 4 a Pat's is 2.5 litres of...

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