For each of the following scenarios, answer the following questions:

1. What's the absolute advantage of every country?

2. What's the per unit opportunity cost for producing each item in every country?

3. Who has a comparative advantage in each item?

4. What's a term of trade that benefits both countries?

SCENARIO 1: Cuba takes 4 hours to make a TV and 12 hours to make salsa. Mexico takes 1 hour to make a TV and 5 hours to make salsa.

SCENARIO 2: Japan can produce 4 laptops or 12 phones. Brazil can produce 1 laptop or 5 phones. SCENARIO 3: Korea can produce 3 cars or 9 motorcycles. Germany can produce 4 cars or 8 motorcycles. SCENARIO 4: The United States can produce 20 planes or 2 cruise ships. France can produce 12 planes or 2 cruise ships.

Answer rating: 100% (QA)

Lets analyze each scenario step by step Scenario 1 1 Absolute Advantage Cuba Absolute advantage in salsa can produce in fewer hours Mexico Absolute ad... View the full answer