ECON216_Spring2011_Tutorials_Chapter_2_questions_with_solution

ECON216_Spring2011_Tutorials_Chapter_2_questions_with_solution

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ECON216 Tutorial 2 Week 3 1. The following table shows bushels of wheat and yards of cloth that the US and the UK can produce with one hour of labour time under four different hypothetical situations. In each case, identify the commodity in which the US and the UK have a. an absolute advantage b. a comparative advantage or disadvantage Case A Case B Case C Case D US UK US UK US UK US UK Wheat (bushels/hour) 4 1 4 1 4 1 4 2 Cloth (yards/hour) 1 2 3 2 2 2 2 1 1.a. In case A, the United States has an absolute and a comparative advantage in wheat and the United Kingdom in cloth. In case B, the United States has an absolute advantage (so that the United Kingdom has an absolute disadvantage) in both commodities. In case C, the United States has an absolute advantage in wheat but has neither an absolute advantage nor disadvantage in cloth. In case D, the United States has an absolute advantage over the United Kingdom in both commodities. b.
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This note was uploaded on 03/19/2012 for the course ECON 215 taught by Professor Rodgers during the Three '08 term at University of Wollongong, Australia.

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ECON216_Spring2011_Tutorials_Chapter_2_questions_with_solution

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