Assignment:
Absolute and Comparative Advantage
Use the table below to answer the questions concerning absolute and comparative advantage.
|
|
Lumber
|
Atomobiles
|
|
United State
|
8
|
8
|
|
Canada
|
4
|
2
|
1. Which country has an absolute advantage in producing lumber?
2. Which country has an absolute advantage in producing automobiles?
3. Which country has a comparative advantage, if any, in producing lumber?
4. Which country has a comparative advantage if any, in producing automobile?
5. Should the U S trade with Canada? If so, what should be imported and what should be exported?
6. Should Canada trade with the U S? If so, what should be imported and what should be exported?