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Free Trade or Fair: The Domestic Politics of Tariffs
Free trade or fair: The domestic politics of tariffs
Exercise 10-1. Free Trade in Widgets and Gizmos

Table 10.1 indicates the productivity (the amount of output produced by one worker per day) of two countries (Malistan and Ukralia) for two particular goods (widgets and gizmos). Assume these are the only two countries that can trade these items with each other. Answer the questions below using this table.

  • Which country has an absolute advantage in producing widgets?

  • Which country has an absolute advantage in producing gizmos?

  • Which country has a comparative advantage in producing widgets?

  • Which country has a comparative advantage in producing gizmos?

  • Under free trade, which country would produce widgets?

  • Under free ...

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