ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 6 September 2024
ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 6 September 2024 ; 100% TRUSTED Complete, trusted solutions and explanations. Ensure your success with us...
ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 6 September 2024 ; 100% TRUSTED Complete, trusted solutions and explanations. Ensure your success with us...
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International Trade
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,ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester
2 2024 - DUE 6 September 2024 ; 100% TRUSTED
Complete, trusted solutions and explanations.
Question 1A Use the hypothetical information in the table below
to answer the questions that follow: Output/hr Unos Tres
Cellphones (ton/hr) 18 6 Candles (ton/hr) 6 8 (i) Identify the
product of absolute advantage and disadvantage for both Unos
and Tres. Explain your answer. [4 marks] (ii) From your answer
in (i) above, explain whether trade is possible and explain the
pattern of trade according to the theory of absolute advantage. [4
marks] 2 (iii) Determine the commodity of each nation’s
comparative advantage and disadvantage. No marks will be
awarded if you do not show your workings. [6 marks] 3 (iv)
From your answer in (iii) above, explain whether trade is
possible and the pattern of trade according to the theory of
comparative advantage. [6 marks] [20]
(i) Identify the product of absolute advantage and
disadvantage for both Unos and Tres. Explain your answer.
[4 marks]
Absolute Advantage:
A country has an absolute advantage in producing a good if it
can produce more of that good using the same amount of
resources as another country.
• Unos:
, o Cellphones: Unos can produce 18 cellphones per
hour, compared to Tres, which can only produce 6
cellphones per hour. Hence, Unos has an absolute
advantage in producing cellphones.
o Candles: Unos can produce 6 tons of candles per
hour, while Tres can produce 8 tons per hour.
Therefore, Unos has an absolute disadvantage in
producing candles.
• Tres:
o Cellphones: Tres can only produce 6 cellphones per
hour, while Unos can produce 18 cellphones per hour,
so Tres has an absolute disadvantage in producing
cellphones.
o Candles: Tres can produce 8 tons of candles per hour,
compared to Unos’ 6 tons, giving Tres an absolute
advantage in producing candles.
Conclusion:
• Unos has an absolute advantage in cellphones but an
absolute disadvantage in candles.
• Tres has an absolute advantage in candles but an absolute
disadvantage in cellphones.
(ii) From your answer in (i) above, explain whether trade is
possible and explain the pattern of trade according to the
theory of absolute advantage. [4 marks]
Trade Possibility:
Trade is possible when each country has an absolute advantage
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