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Chapter 19: Q 19. (page 462)

Look at Exercise 19.2. 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.

Short Answer

Expert verified

Both France and Tunisia have a different opportunity cost in different products.

Step by step solution

01

Step 1. Definition

Opportunity cost: it is a cost that is measured in terms of what you give up of some other good.

02

Step 2. Explanation

The opportunity cost of producing wine is less in France, and the opportunity cost of producing sweaters is less in Tunisia. So, France has a comparative advantage in wine, Tunisia has a comparative advantage in sweaters.

03

Step 3.

A lower opportunity cost means to do the same task or produce the same good, the cost of giving up the alternative is lower than the others. This puts a person at an advantageous position than the others. They can produce the same goods as others but they dont have to sacrifice as much as others.

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Most popular questions from this chapter

Look at Table 19.9. Is there a range of trades for

which there will be no gains?

Table 19.15 shows how the average costs of production for semiconductors (the “chips” in computer memories) change as the quantity of semiconductors built at that factory increases.

a. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale?

b. If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors 50,000 semiconductors? 30,000 semiconductors?

c. Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.

You just got a job in Washington, D.C. You move

into an apartment with some acquaintances. All your roommates, however, are slackers and do not clean up after themselves. You, on the other hand, can clean faster than each of them. You determine that you are 70% faster at dishes and 10% faster with vacuuming. All of these tasks have to be done daily. Which jobs should you assign to your roommates to get the most free time overall? Assume you have the same number of hours to

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Are the gains from international trade more likely

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