Chapter 19: Problem 2
How can there be any economic gains for a country from both importing and exporting the same good, like cars?
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Chapter 19: Problem 2
How can there be any economic gains for a country from both importing and exporting the same good, like cars?
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Are the gains from international trade more likely to be relatively more important to large or small countries?
What are the two main sources of economic gains from intra-industry trade?
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 devote to cleaning. Now, since you are faster, you seem to get done quicker than your roommate. What sorts of problems may this create? Can you imagine a trade-related analogy to this problem?
Can a nation鈥檚 comparative advantage change over time? What factors would make it change?
You just overheard your friend say the following: 鈥淧oor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.鈥 How would you respond?
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