Cheavpove Pen: Absolute Advantages

Cheavpove Pen
Econ: 121 B

Problems: 2,4,6,8,10,12,14,16

2.

b. Tivoli have more advantage in meatball production than Frivoli. The opportunity cost for Tivoli is 3/5 of spaghetti, which is lower than Frivoli (4/3). On the other hand, Frivoli have more advantage in spaghetti production because their opportunity cost is lower (3/4<5/3). As a result, now, the Frivoli have the absolute advantage in both meatball and spaghetti production.
4.
Not correct. He confused the idea of absolute advantage and comparative advantage. In the book, comparative advantage is “the source of gains from trade between individuals and countries” and absolute advantage is “ability to produce a particular good or service better than anyone else”. If the EU

The households will screw the circle flow if the government decided to subsidize 50% of all college students’ tuition. The schools will hire more faculty and accept more students to make more money. The scholarships will go from the schools to the households.
8.
Positive:
“Workers in Asia often work in sweatshop conditions earning only pennies an hour.”
“ American workers are more productive”
“ American workers are more productive and as a result earn higher wages”
Normative:
“the government should enact legislation banning imports of low - wage Asian clothing” b. No. It is about the absolute advantage that American workers have over Asian workers. c. If America stops import the goods from Asia, then we have to produce it themself. As a result, we have to give up producing other goods. This would not be efficient because it would make some Americans worse off. d. They are definitely hurt by this policy because they have to produce less and fouce on produce others things.

10. True. It is definitely easy to build an economic model that accurately reflects events that have already occurred. However, to build an economic model to forecast future events is a different story because the future is unpredictable. So this imply that the economic model it is just a representation and is not going to be perfect and to build a good economic model there are so many things to take into