Not sure if the marked ones are correct. INTERNATIONAL TRADE 1. If Carl is able

Question

Not sure if the marked ones are correct. INTERNATIONAL TRADE 1. If Carl is able to produce a greater number of baskets per hour than Sheila, then: Carl cannot have a comparative advantage in the production of baskets. a. bCarl has an absolute advantage in the production of baskets. c. Sheila has an absolute advantage in the production of baskets. d. Sheila has a comparative advantage in the production of baskets. 2. If Carl's opportunity cost per basket is 4 bowls, but Sheila's opportunity cost per basket Carl has a comparative advantage in the production of baskets. is 3 bowls, then: a. b. Carl has an absolute advantage in the production of baskets. c. Sheila has an absolute advantage in the production of baskets. Sheila has a comparative advantage in the production of baskets Use the table below to answer questions 3 through Wheat 10 hours 4 hours Corn 5 hours 8 hours Farmer Jones Farmer Smith In a time period of 40 hours, Farmer Jones is able to produce either or units of com. a. 4: 8 units of wheat c. 5; 10 10: 5 4: 8 f conFarer 4. In a time period of 40 hours, Farmer Smith is able to produce either units of wheat units of corn. c. 5; 10 d. 10: 5 5. The opportunity cost of one unit of wheat is: a. 2 units of corn for Farmer Jones and 's unit of corn for Farmer Smith. ½ unit of corn for Farmer Jones and 2 units of corn for Farmer Smith. 2 units of corn for both Farmer Jones and Farmer Smith. ½ unit of corn for both Farmer Jones and Farmer Smith. c. d, 6. According to the principle of comparative advantage, both farmers can gain from trade if and Farmer Smith specializes Farmer Jones specializes in the production of in the production of a. both goods; neither good b. wheat; corn c. neither good; both goods d. corn; wheat

Explanation / Answer

1. Option B. Carl has absolute adventage in the production of basket

   The theory of absolute adventage is developed by Adam smith. In the case of international trade countries should specialize in the production and exchange of such commodities in case of which they command some absolute adventage.

2. Option D Shiela has comapritive adventage in the production of basket

                The theory of comparitive adventage is developed by David Ricardo. Him, a country will specialize in the production in which it has a greater relative comparitive advetage adventage in cost than other countries .

3. Option D 10,5

4. Option A-4,8

5.option A- 2 units of corn for jones and 1/2 units of corn for farmer smith

       It is calculated by farmer jones is =10/5=2

                                 farmer smith is =4/8=0.5

6. Option B wheat , corn

7. Option D- Nothing and costello produces both fish and bread

8. Option B- 12;30

9. Option B-200:80

10- Option D 120 wheat and 40TVs

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