Comparative Advantage and International Trade

Comparative Advantage and International Trade

1) Explain how the United States, being a large economy with an abundance of natural resources, labor, and capital, can benefit by not being in autarky.

2) It was shown in the video that the United States had the comparative advantage in burgers. Using the table below, show and explain how Mexico has the comparative advantage in phones.

Mexico

United States

Possibility

Burgers

Phones

Burgers

Phones

A

6

0

12

0

B

4

8

8

8

C

2

16

4

16

D

0

24

0

24

3) From your answer in the previous question, what is the opportunity cost of burgers for the United States, i.e. how many burgers must the United States give up to produce one phone? What would be an agreeable terms of trade for 1 phone?

4) At the end of the video, a supply and demand graph of the phone market for both countries was shown. Explain why Mexico exported phones to the United States.

5) Suppose, the market for burgers was shown rather than the market for phones in the supply and demand graphs. For the United States to export burgers and Mexico to import burgers, what would world price need to be, in each country, relative to the domestic price?

6) Lastly, explain what a tariff is and the effect it can have on burger imports for Mexico.

Looking for solution of this Assignment?

WHY CHOOSE US?

We deliver quality original papers

Our experts write quality original papers using academic databases.We dont use AI in our work. We refund your money if AI is detected  

Free revisions

We offer our clients multiple free revisions just to ensure you get what you want.

Discounted prices

All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount

100% originality

We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity.We have ZERO TOLERANCE TO USE OF AI

On-time delivery

We will deliver your paper on time even on short notice or  short deadline, overnight essay or even an urgent essay