Refer to Table 9-9. a. Which country has an absolute advantage ...

[Starlight]

Refer to Table 9-9.
 
  a. Which country has an absolute advantage in the production of both light bulbs and flash drives?
  b. Which country has a comparative advantage in the production of light bulbs?
  c. Which country has a comparative advantage in the production of flash drives?
 
  Table 9-10
 
   Pens Pencils
  Tran 40 160
  Farah 50 150
 
  Table 9-10 shows the output per week for pens and pencils by Tran and Farah.

Question 2

Explain what potential conflict exists between shareholders in a corporation and the corporation's managers.
 
  What will be an ideal response?

[xiazhe]

Answer to Question 1

a. Neither country has an absolute advantage in the production of both products.
b. Mexico has a comparative advantage in the production of light bulbs.
c. Canada has a comparative advantage in the production of flash drives.

Answer to Question 2

The principal-agent problem exists anytime an agent pursues his or her own interests instead of the interests of the principal who hired the agent. In the context of corporations, this can occur if hired managers might not have the same set of goals that corporate owners have.