1B Absolute advantage refers to the ability of a country to produce a good or service better than any other for less resources. This is different from Mercantilism because it does not force a country to export everything, but it encourages a country only to export what its best at doing/making saving money and time. Trade benefits this theory when two countries can clearly been seen as having an absolute advantage in its respective goods or …show more content…
This is because It would cost CB 2 wines to produces 1 piece of cloths meaning if CB sold its cloth for 3 or 4 wines it would be making a profit. While it would cost CA 5 wines for 1 piece of cloth, meaning if they could purchase 1 piece of cloth for anything less than 5 wines they would be saving.
g. Create 2 tables summarizing the short term and long term effects of free trade on
Landowners and laborers in each country (see Figure 5.2 in p. 4 in PDF).
3A, Country C Land owners and Laborers would both lose in the wheat market but gain in the cloth market. Because wheat prices went down and cloth prices went up from the beginning of trade. Meaning they produced less wheat and more cloth.
3B, Country D landowners and laborers would both gain in the wheat market and lose in the cloth market. This is because wheat went up in price and price of cloth went down. Meaning they would produce more wheat and less cloth. 3C, The long term effects on land in country c was lose, this Is because the country is not land abundant but labor