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ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 6 September 2024
ECS3702 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 6 September 2024
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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]
Output/hr Unos (units/hr) Tres (units/hr)
Cellphones 18 6
Candles 6 8
(i) Identify the product of absolute advantage and
disadvantage for both Unos and Tres. Explain your answer. [4
marks]
Absolute advantage is when one country can produce more of
a good with the same resources than another country.
, Unos:
o Cellphones: 18 units/hr
o Candles: 6 units/hr
Tres:
o Cellphones: 6 units/hr
o Candles: 8 units/hr
Unos has an absolute advantage in cellphones because it
can produce 18 cellphones per hour, while Tres can only
produce 6.
Tres has an absolute advantage in candles because it can
produce 8 candles per hour, while Unos can only produce
6.
Thus:
Unos has an absolute disadvantage in candles.
Tres has an absolute disadvantage in cellphones.
(ii) From your answer in (i) above, explain whether trade is
possible and the pattern of trade according to the theory of
absolute advantage. [4 marks]
According to the theory of absolute advantage, trade is
possible when each country specializes in the production of
goods where it has an absolute advantage and trades for the
other good.
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