Meagan, a contractor, is hired to install cabinets in a new home and has to decide...

 

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Meagan, a contractor, is hired to install cabinets in a new home and has to decide whether to build the cabinets herself or purchase them from a local cabinet shop. a. Meagan should build the cabinets herself only if she has an absolute advantage in the production of cabinets. she has a comparative advantage in the production of cabinets. the cabinet maker has an absolute advantage in the production of cabinets. the cabinet maker has a comparative advantage in the production of cabinets. b. If the cabinet maker is foreign rather than local, the answer to part a does change regardless of trade costs. does not change as long as trade costs are negligible. does not change regardless of trade costs. does change as long as trade costs are negligible. Meagan, a contractor, is hired to install cabinets in a new home and has to decide whether to build the cabinets herself or purchase them from a local cabinet shop. a. Meagan should build the cabinets herself only if she has an absolute advantage in the production of cabinets. she has a comparative advantage in the production of cabinets. the cabinet maker has an absolute advantage in the production of cabinets. the cabinet maker has a comparative advantage in the production of cabinets. b. If the cabinet maker is foreign rather than local, the answer to part a does change regardless of trade costs. does not change as long as trade costs are negligible. does not change regardless of trade costs. does change as long as trade costs are negligible.

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