Consider two trading partners: Canada and Ireland. Suppose someone told you that in the production of corn, Canada has an absolute advantage, but in the production of sheep, Ireland has a comparative advantage. What does Canada's absolute advantage tell you? What does Ireland's comparative advantage tell you?
Answer to relevant QuestionsAdmitting all exceptions to the rule, the rule is that free trade benefits all nations. Make the case. The Irish complain that they never got a chance to make automobiles because the English, their major trading partner, are more experienced and therefore more efficient at it. Would-be Irish automakers ask their government to ...Suppose the United States imposed a $100 tariff on each Japanese VCR imported. What would happen to the equilibrium price and total quantity bought and sold in the United States? How can the government fix an exchange rate? Discuss the limitations that a government faces in maintaining a fixed rate While countries with relatively low per capita GDP have been with us from time immemorial, there has been for many an encouraging change in their economic fortunes during the past 50 years. Still, there remains a set of ...
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