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Wize University Microeconomics Textbook > Gains from Trade

Absolute & Comparative Advantage

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The small economy of Adelaide can grow 100 apples or produce 20 guns a day. The small economy of Borunisa can grow 60 apples or 30 guns a day.

a) Who has absolute advantage in growing apples?


b) Who has absolute advantage in growing guns?


c)
Adelaide
has a comparative advantage in producing apples




d)
Borunisa
has a comparative advantage in producing guns




e) If
Adelaide
wants to specialize in producing apples and offers 1 apple to
Borunisa
. At what rate/price should it offer for both to be better off?

More Absolute & Comparative Advantage Questions:
Which product will country A import?
Economic growth can occur for two economies if each economy
In England producing an engine takes 5,000 hours of labor and producing a shoe takes 2 hours of labor. In Holland producing an engine takes 20,000 hours of labor and producing a shoe takes 4 hours of labor. What will these countries trade?
If the opportunity cost in India of producing coal is 0.5 barrels of oil and in China the opportunity cost of producing coal is 0.3 barrels of oil then which of the following is true?
Cotton Cocoa Beans
Peru 2 4
Brazil 1 6
Practice Question: Comparative Advantage
Economic growth can occur for two economies if each economy:
The figure above shows the PPF for Starria, a nation that produces two goods, roses and orchids.
What is the opportunity cost of 80 dozen orchids?
Canada produces 30 hockey sticks or 5 gallons of milk every hour, while the U.S. produces 20 hockey sticks or 20 gallons of milk every hour.
Which of the following is true?
Absolute & comparative advantage
Canada produces 30 hockey sticks or 5 gallons of milk every hour, while the U.S. produces 20 hockey sticks or 20 gallons of milk every hour.