Author Question: If two countries, A and B, can produce the following amounts of two goods X and Y for a given amount ... (Read 48 times)

folubunmi · **on:** May 25, 2020

Question 1

The main advantage of trade between two countries is that
◦ employment in both countries will increase.
◦ both countries can produce beyond their previous resource and productivity constraints.
◦ both countries can consume beyond their previous resource and productivity constraints.
◦ trade makes both countries more self-sufficient.

Question 2

If two countries, A and B, can produce the following amounts of two goods X and Y for a given amount of resources:

	Good X	Good Y
Country A	10	7
Country B	12	10

Assuming there are no transport costs in trade.
◦ Country A has a comparative advantage in the production of good X and will export good Y.
◦ Country A has a comparative advantage in the production of good X and will import good Y.
◦ Country B has a comparative advantage in the production of good Y and will import good Y.
◦ Country A has a comparative advantage in the production of good Y and will export good Y.

jonathanballen97 · **Reply #1 on:** May 25, 2020

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