Chapter 33: Q. 23. (page 804)
Does intra-industry trade contradict the theory of comparative advantage?
Short Answer
Intra-industry trade do not contradict the theory of comparative advantage.
Chapter 33: Q. 23. (page 804)
Does intra-industry trade contradict the theory of comparative advantage?
Intra-industry trade do not contradict the theory of comparative advantage.
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Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain
If trade increases world GDP by 1% per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint: To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lanka’s GDP.
Look at Exercise 33.2. Compute the opportunity costs of producing sweaters and wine in both France and Tunisia. Who has the lowest opportunity cost of producing sweaters and who has the lowest opportunity cost of producing wine? Explain what it means to have a lower opportunity cost.
Can a nation’s comparative advantage change over time? What factors would make it change?
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