Question
Can you please help me know what the answer should for this question? It is from International Economics 9th edition by Husted and Melvin. The
Can you please help me know what the answer should for this question? It is from International Economics 9th edition by Husted and Melvin.
The following table shows the production of two goods in United States and Canada.
| United States | Canada |
Good X | 3 | 10 |
Good Y | 5 | 6 |
The numbers in the table indicate the number of hours of labor required to produce one unit of the good.
(d) Show the effect on World output if each country moved toward specialization in the good in which it has an absolute advantage. Prepare a table similar to table 3.2 on page 47.
(a) Calculate the opportunity cost of producing Good X and Good Y for the United States.
(b) Calculate the opportunity cost of producing Good X and Good Y for Canada.
(c) Which country has a comparative advantage in Good X and will therefore specialize in good X?
(d) Which country has a comparative advantage in Good Y and will therefore specialize in good Y?
(e) Is the specialization based on comparative advantage different from the specialization based on absolute advantage (as determined in (a).
(f) What good does the U.S. buy from Canada? What is the maximum price the U.S. will pay for this good?
(g) What good does Canada buy from the U.S. What is the maximum price Canada will pay for this good?
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