Question

galve
Puis le long-run will this mmm car
economic profits, positive economic profits, or zero economic profits?
(a) Distinguish between the Absolute advantage and the Comparative advantage
trade.
(b) Consider Figure 2 below, where AB and A'B' represents tw
ve 2 below, where AB and A'B' represents two production possibility
frontiers. There are two countries viz. 1 and 2. Country I and han
nes viz. I and 2. Country 1 and 2 are assumed to be
and labour abundant respectively, while good X and Y arc assumcu
labour and capita
uvely. Let P and P' represent autarky equilibriums
vo nations respectively, and let Q and O' be their equilibrium after trade
respectively. Each nation after trade consumes at point E on indir
after trade consumes at point E on indifference curve IC.
er assuming all the assumptions of the H-O theory hold, answer the following
questions:
(1)
Which among AB and A'B' represent production possibility frontier for country
1 and 2 respectively?
Which country among 1 and 2 will import good X and which will import good
Y?
(iii) Are exports of good X by one country equal to another country's imports of
good X? What can be said about the import and export volume of good Y?
(iv) Is trade beneficial to each nation in terms of utility attained?
(v) What does slope of line ll' represent here?
A
100+
Good Y
207
OR V
IC
B'
0
20 40 60 75 85
105
Good x
Figure 2​

Answer 1

Answer:

b JBL fkn Tom GM umm GL do do umm GL stretch John him you'll think