On planet Economus, the countries Blib and Flib can produce the amounts of string and rope indicated in the table below with one unit of land. The country of Blib has 20 units of land available while the country of Flib has 10 units of land. Does either country have an absolute advantage? Which country has a comparative advantage in string production? Which country has a comparative advantage in rope production? Is it possible for the two countries to benefit from trade?
Definitions:
Price Appreciation
An increase in the value of an asset or investment over time.
Rate of Return
A measure of the profitability of an investment, calculated as a percentage of the original cost of the investment.
Dividend Yield
An indicator showing the annual amount a corporation distributes as dividends compared to its current share value.
Required Rate
The minimum return that investors expect to earn from an investment to make it worth their while.
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