Learn Before
Setup for the Greta and Carlos Specialization Example
Comparative Advantage
Calculating Greta's Opportunity Cost for Wheat
Comparative Advantage in the Greta and Carlos Example
In the example of Greta and Carlos, Greta's relative cost of producing wheat is lower than Carlos's, which gives her a comparative advantage in that crop. Conversely, Carlos holds a comparative advantage in apples because his relative cost for apple production, measured by the amount of wheat he forgoes, is lower than Greta's. This holds true even though Greta has an absolute advantage in producing both goods.
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Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
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Absolute Advantage
Comparative Advantage in the Greta and Carlos Example
Self-Sufficiency Production in the Greta and Carlos Example
Gains from Trade in the Simplified Greta-Carlos Model
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce 1,250 apples or 50 tons of wheat. In the same period, Carlos can produce 1,000 apples or 20 tons of wheat. Based on this information, what is the cost for Carlos to produce one additional ton of wheat, measured in the number of apples he must forgo?
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce 1,250 apples or 50 tons of wheat. In the same period, Carlos can produce 1,000 apples or 20 tons of wheat. Based on this information, the number of apples Greta must give up to produce one ton of wheat is less than the number of apples Carlos must give up to produce one ton of wheat.
Calculating Production Trade-offs
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce a maximum of 1,250 apples or a maximum of 50 tons of wheat. Carlos can produce a maximum of 1,000 apples or a maximum of 20 tons of wheat. If Greta decides to produce 30 tons of wheat, what is the maximum number of apples she can also produce in the same year, assuming a constant rate of trade-off between producing the two goods?
Calculating Combined Production Possibilities
Evaluating Production Assignments
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce 1,250 apples or 50 tons of wheat. Carlos can produce 1,000 apples or 20 tons of wheat. Match each production action with its corresponding cost in terms of the other good.
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce 1,250 apples or 50 tons of wheat. Carlos can produce 1,000 apples or 20 tons of wheat. To produce one additional ton of wheat, Greta must give up producing ______ apples.
Consider a scenario with two individuals, Greta and Carlos, who can produce apples and wheat. In a year, Greta can produce a maximum of 1,250 apples or 50 tons of wheat. Carlos can produce a maximum of 1,000 apples or 20 tons of wheat. Assuming they can coordinate their production, which of the following combined annual outputs is impossible for them to achieve?
Calculating Production with Divided Labor
What does the concept of comparative advantage imply?
Which of the following best describes the principle of comparative advantage?
Why is comparative advantage important in international trade?
How does comparative advantage benefit countries engaged in international trade?
Comparative Advantage in the Greta and Carlos Example
Measuring Relative Cost via Opportunity Cost
Comparative Advantage in the Greta and Carlos Example
Learn After
Why Greta Trades for Apples Despite Her Absolute Advantage
Imagine two individuals, Greta and Carlos, who can each produce apples and wheat. In a year, Greta can produce either 1,250 apples or 50 tons of wheat. In the same amount of time, Carlos can produce either 1,000 apples or 20 tons of wheat. Based on this information, which statement best explains the basis for a mutually beneficial specialization and trade agreement between them?
Evaluating a Trade Proposal
Calculating Opportunity Cost for Comparative Advantage
In a hypothetical economy, two individuals, Greta and Carlos, produce apples and wheat. In a given period, Greta can produce either 1,250 apples or 50 tons of wheat. During the same period, Carlos can produce 1,000 apples or 20 tons of wheat. Which of the following statements provides the most accurate analysis of their production capabilities?
In an economy with two producers, Greta and Carlos, Greta can produce 1,250 apples or 50 tons of wheat, while Carlos can produce 1,000 apples or 20 tons of wheat. Because Greta is more productive at making both apples and wheat, she has no economic reason to trade with Carlos.
Based on the production scenario below, match each description to the correct individual.
Scenario: In a year, Greta can produce 1,250 apples or 50 tons of wheat. In the same amount of time, Carlos can produce 1,000 apples or 20 tons of wheat.
Justifying Trade Despite Absolute Advantage
Consider two producers, Greta and Carlos. Greta can produce 1,250 apples or 50 tons of wheat. Carlos can produce 1,000 apples or 20 tons of wheat. If they specialize based on their respective comparative advantages and decide to trade, which of the following represents a range of prices for one ton of wheat (in terms of apples) that would be mutually beneficial for both?
Consider a scenario with two producers. Greta can produce either 1,250 apples or 50 tons of wheat in a year. Carlos can produce either 1,000 apples or 20 tons of wheat in the same period. For Greta to have a comparative advantage in producing wheat, her opportunity cost must be lower than Carlos's. Given the production figures, Greta's opportunity cost of producing one ton of wheat is ____ apples.
An economic advisor wants to determine the most efficient production plan for two individuals, Greta and Carlos, and establish if they can benefit from trade. Greta can produce either 1,250 apples or 50 tons of wheat. Carlos can produce either 1,000 apples or 20 tons of wheat. Arrange the following steps into the correct logical sequence for analyzing this scenario based on the principle of comparative advantage.