Th4.1: Numerical Example Three Flashcards by Verity Russell

Q

Refer to PP

Look at Graph 12. What is this another example of?

A

comparative cost advantage

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Q

Refer to PP

Look at Graph 12. Who has an absolute advantage in both?

A

the USA

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Q

Refer to PP

Look at Graph 12. What should the UK specialise in and why?

A

cars, since they can produce 50% of the USA output for this but only 1/3 of vans

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Q

What is the aim of these tables?

A

to prove that specialisation (C) is better than each country working individually

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Q

How are the percentages worked out?

A

through the method of trial and improvement

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