Ricardian problem about comparative advantage
Question 1: Describes a simple Ricardian problem about comparative advantage.
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In a committee meeting of the United Nations you are considering the following questions: Question 1. When is international trade an opportunity for workers? When is it a threat to workers?
What is the cost of growing 200 bushels of wheat in Iowa? What is the cost of growing 200 bushels of wheat in Oklahoma? Which state has a comparative advantage in growing wheat?
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Problem: Explain unequivocally why the foundation of trade has nothing to do with absolute advantage and only the law of comparative advantage is relevant.
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Problem 1. Will a country do better importing or exporting a good for which it has a comparative advantage? Why?
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