Reference no: EM132794909
Assume that Great Britain and the United States can both produce wheat (W) and cloth (C). The amount of wheat and cloth that each nation can produce in one day is presented in the table below.
Comparative Advantage Wheat Cloth
Great Britain 160 480
United States 1,120 560
Instructions: Round your answers to 2 decimal places.
a. Use the information above to compute the opportunity cost of producing 1 unit of wheat in each country.
For Great Britain, the opportunity cost of producing 1 unit of wheat is unit(s) of cloth.
For the United States, the opportunity cost of producing 1 unit of wheat is unit(s) of cloth.
b. Use the information above to compute the opportunity cost of producing 1 unit of cloth in each country.
For Great Britain, the opportunity cost of producing 1 unit of cloth is unit(s) of wheat.
For the United States, the opportunity cost of producing 1 unit of cloth is unit(s) of wheat.
c. With mutually beneficial trade, wheat will be exported by (Click to select) the United States at a price higher than unit(s) of cloth but lower than unit(s) of cloth.
Great Britain
both nations
neither nation
d. With mutually beneficial trade, cloth will be exported by (Click to select) the United States at a price higher than unit(s) of wheat but lower than unit(s) of wheat.
Great Britain
both nations
neither nation
e. Assume that internationally 1 unit of wheat can be traded for 1.8 units of cloth, which is the same as 1C = 0.56W. Which of the following statements is correct?
-Both nations will benefit from trade.
-Neither nation will benefit from trade.
-Only the United States will benefit from trade.
-Only Great Britain will benefit from trade.