Answer Happy

QUESTIONS 1. Which nation has an absolute advantage in steel production? in coal production? 2. Calculate the opportunity cost of each product in each nation. Explain your calculations. 3. Which nation has a comparative advantage in the production of steel? Explain. 4. Assume each nation has 4000 labour hours to use each month and, without trade, each nation would use half its labour in the production of each good. Produce a set of tables similar to Figures 176, 177, and 17.8 to prove that the two nations would bene- fit from specialization and trade. Support your con- clusions by explaining your calculations. 5. Why would trading six tonnes of steel for three tonnes of coal not be acceptable terms of trade for Tropicona? Explain. 6. Explain how the two countries can co-operate to correct a simultaneous shortage of steel and a surplus of coal. Produce a revised total production table to show this correction. 7 Arcticona and Tropicona have an economic incen tive to maintain peaceful relations. Explain why.