1. Explain how a country could have an absolute disadvantage in the production of a product relative to another country and still have a comparative advantage in the production of the product.

2. Listen to the following PODCAST. How do speakers define the theory of comparative advantage?

• "David Autor on Trade, China, and U.S. Labor Markets." PODCAST by EcontalkDavid Autor
• of MIT talks with EconTalk

3. A tourist named Mr. Lopez from Chile visited Arlington and bought a ticket for the Dallas Cowboys game. During his stay, he also paid for his hotel, meals, and various items from local shops, which totaled $4000. What is the estimated increase in US exports resulting from Mr. Lopez's visit? What is the estimated increase in Chile's imports due to Mr. Lopez's US visit?

4. During his visit to Arlington, Mr. Lopez, a tourist from Chile, bought a pizza from Pie Five Pizza, located on Spaniolo Dr. This transaction can be considered as an export of the pizza to Chile without the need for Pie Five to pay for transportation costs. Instead of Pie Five delivering the pizza to Chile and incurring transportation expenses, Mr. Lopez personally went to Pie Five on Spaniolo Dr. and picked it up. To cover the transportation charge, Mr. Lopez paid for it himself. As a result, this transaction contributed to the increase in our exports in the same way that shipping pizza to Chile would have. The only difference is that Mr. Lopez bore the transportation cost, not Pie Five.

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1 Absolute Disadvantage vs Comparative Advantage Absolute disadvantage in production occurs when a country can produce a good using more resources like time labor or money than another country For ins... View the full answer