Unit 1, Chapter 38
Mr. Maurer
AP Economics
Name: _______________________________
Date: _____________________
Chapter 6, Problem Set #6 – More Practice with Comparative Advantage and Trade
1. Refer to the table below to answer the following countries. These two countries are producing
textiles and wheat using equal amounts of resources.
Bushels of Wheat
Units of Textiles
Weekly Output per Worker
Country A
Country B
30
10
40
60
a. Is this an input problem or an output problem?
b. What is the opportunity cost of producing a bushel of wheat for each country?
c. Which country has the absolute advantage in wheat production? Explain.
d. Which country has the comparative advantage in textile production? Explain.
e. Determine the terms of trade that would be beneficial to both countries. Include which country
will be exporting which good and which will be importing which good.
Unit 1, Chapter 38
2. Use the graph for the following questions.
a. Is this an input problem or an output problem?
a. Which country has an absolute advantage in the production of each good? Explain.
b. For Country A, what is the opportunity cost of a bushel of corn? For Country B?
c. Which country has a comparative advantage in producing each good?
d. If the countries specialize and trade, which country will import computers?
e. What is the highest price that country will be willing to pay for a computer? Explain
Unit 1, Chapter 38
3. In France, a pump can be produced by 3 workers in one day and a magazine by 2 workers in one
day. In the United States, a pump can be produced by 4 workers in one day, and a magazine by 3
workers in one day.
a. Is this an input problem or an output problem?
b. Which country has an absolute advantage in the production of pumps? In magazines?
c. Calculate the opportunity cost of pumps for France.
d. Calculate the opportunity cost of pumps for the United States.
e. Which country has comparative advantage in the production of pumps? Explain.
c. Which country should specialize in the production pumps? Of magazines?
d. Define the terms of trade that would be beneficial to both countries.
Unit 1, Chapter 38
4. Use the graph at left to answer the
following:
a. Is this an input problem or an output
problem?
b. Which country has an absolute advantage
in each product?
Cars:
Trucks:
c. What is the opportunity cost of a car in each country?
d. Which country has a comparative advantage in the production of cars? Explain.
e. If these countries specialize and trade, what good will China import. Explain.
f. Define the terms of trade that will be beneficial to both countries.