According to the table above determine which country has the absolute advantage in corn and which in soybeans. In addition, determine which country has the comparative advantage in corn and which in soybeans
Make sure to support your answer by deriving the opportunity costs of each.
Canada has the absolute advantage in the production of corn and Mexico has the absolute advantage in the production of soybeans. In addition, Canada also has a comparative advantage in the production of corn and Mexico has a comparative advantage in the production of soybeans. The reason is that the opportunity cost of corn in Canada is ¼ of a soybean while in Mexico the opportunity cost of corn is 5 soybeans. By taking the reciprocal of each the opportunity costs of soybean are 4 corn for Canada and 1/5 corn for Mexico.
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A change in the full-employment quantity of labor ________ the short-run aggregate supply curve and ________ the long-run aggregate supply curve
A) shifts; shifts B) shifts; does not shift C) does not shift; shifts D) does not shift; does not shift
If the ATC curve has a positive slope, then the MC curve must be
A) horizontal. B) vertical. C) above the ATC curve. D) below the ATC curve.