Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

Comparative Advantage Question watch

Announcements
    • Thread Starter
    Offline

    9
    ReputationRep:
    I have been trying to do this one comparative advantage/international trade question. And, although I have the answer, I dont understand why. Its one of the multiple-choice type. I was wondering if anyone could explain it to me. Hopefully, I have attached the word document to this message which has the diagram on it.

    Its just really bugging me now. And I know there'll be a question on it in my exam tomorrow morning..
    Attached Files
  1. File Type: doc Commodity A.doc (20.5 KB, 108 views)
    Offline

    14
    ReputationRep:
    (Original post by Jessie)
    I have been trying to do this one comparative advantage/international trade question. And, although I have the answer, I dont understand why. Its one of the multiple-choice type. I was wondering if anyone could explain it to me. Hopefully, I have attached the word document to this message which has the diagram on it.

    Its just really bugging me now. And I know there'll be a question on it in my exam tomorrow morning..
    i have no idea!
    i dont get it
    Offline

    0
    ReputationRep:
    Plug in some numbers.

    Production:
    A: 3
    B: 3

    Trading:
    A: 5
    B: 2

    It trades 2 of good B for 5 of good A. This is beneficial as it can only produces 1 good of good A for every good B. Thus, specialising in good B is beneficial to it as it has a lower domestic opportunity ratio (1:1 as opposed to 2.5:1) than the country it is trading with. Thus specialise in B and export B, import A.

    Hope this is right
    • Thread Starter
    Offline

    9
    ReputationRep:
    thank you...i think i understand it now...i just hate comparative advanatge and trade in multiple-choice questions.. :mad:
 
 
 
Poll
Do I go to The Streets tomorrow night?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.