What is absolute advantage?

For Economics Class: Read chapters 33 and 34 and answer the questions – (https://openstax.org/details/books/principles-economics-3e) Open Stax web book 1. What is absolute advantage? What is comparative advantage? Under what conditions does comparative advantage lead to gains from trade? Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain. How does comparative advantage lead to gains from trade? 2. Using the two production possibilities tables below figure out which country should specialize in which product. Show the opportunity costs for both countries and which one has the lower opportunity cost. Which country has the absolute advantage in both products? U.S. A B C D E Chemicals 30 24 16 8 0 Robots 0 15 40 65 90 Brazil R S T U V Chemicals 20 15 10 5 0 Robots 0 15 30 45 60 3. What is intra-industry trade? What are the two main sources of economic gains from intra-industry trade? 4. Who does protectionism protect? From what does it protect them? Name and define three policy tools for enacting protectionism. How does protectionism affect the price of the protected good in the domestic market? 5. Does international trade, taken as a whole, increase the total number of jobs, decrease the total number of jobs, or leave the total number of jobs about the same? Is international trade likely to have roughly the same effect on the number of jobs in each individual industry? How is international trade, taken as a whole, likely to affect the average level of wages? Is international trade likely to have about the same effect on everyone’s wages? 6. What are main reasons for protecting “infant industries”? Why is it difficult to stop protecting them? 7. What is dumping? Why does prohibiting it often work better in theory than in practice? 8. What is the “race to the bottom” scenario? 9. Name several of the international treaties where countries negotiate with each other over trade policy. What is the general trend of trade barriers over recent decades: higher, lower, or about the same? 10. If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations? Who gains and who loses from trade? Why is trade a good thing if some people lose? What are some ways that governments can help people who lose from trade?

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