Micro & Macro. Chapter 3 【Interdependence and the Gains from Trade】

1. Specialization and production possibilities
Suppose X produces only X and cars. The resources that are used in the production of these two goods are not specialized—that is...


2. Comparative and absolute advantage
X and Z are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of A and B each farmer can produce per year on a given..

3. Gains from trade
Consider two neighboring island countries called x. They each have 4 million labor hours available per month that they can use to produce corn, jean..

4. Specialization and trade
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its..

5. Terms of trade
Suppose that X and Y both produce oil and cheese. X's opportunity cost of producing a pound of cheese is L barrels of oil while Y's oppor..