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Homework answers / question archive / 1)Assume country A has an absolute advantage in producing all products compared to country B but country B has a comparative advantage in producing several products

1)Assume country A has an absolute advantage in producing all products compared to country B but country B has a comparative advantage in producing several products

Economics

1)Assume country A has an absolute advantage in producing all products compared to country B but country B has a comparative advantage in producing several products. Are there opportunities for gains from trade? If so, what determines the direction of trade? Your response should be at least 75 words (1 paragraph) in length.

2)Explain how international trade allows a country to move beyond its production possibilities frontier and create gains from trade. Your response should be at least 75 words (1 paragraph) in length.

3)The maker of a particular breakfast cereal found that increasing the price from $4.00 to $4.25 per box had no impact on total revenue, but increasing the price further to $4.50 reduced total revenue by 2%. Thus, the demand for the cerealis: a. unit elastic over the range $4.00 to $4.25 and inelastic over the range $4.25 to $4.50 ??? b. elastic over the range $4.00 to $4.25 but not over the range $4.25 to $4.50 c. unit elastic over the range $4.00 to $4.25 and elastic over the range $4.25 to $4.50 d. inelastic over the range $4.00 to $4.50

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