Suppose That the Productivity Per Worker in the Caviar and Salmon

question 86

Essay

Suppose that the productivity per worker in the caviar and salmon industries of Canada and Russia are as follows: $\begin{array} { l c c c } & \underline{ { \text { Output in Thousands of Kilograms } }} \\ & \text { Caviar } && \text { Salmon } \\\text { Canada } & 2 & \text { or } & 3 \\\text { Russia } & 4 & \text { or } & 1\end{array}$ a) Which country has the absolute advantage in producing caviar?
b) Which country has the absolute advantage in producing salmon?
c) Which country has the comparative advantage in producing caviar?
d) Which country has the comparative advantage in producing salmon?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

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Definitions:

Ionic Bond

A chemical bond formed between two atoms when one atom transfers an electron to another, leading to the attraction between positively and negatively charged ions.

Hydrogen Bond

An insubstantial attachment between two molecules produced by the electrostatic allure between a proton of one molecule and an electronegative atom of the other.

Ions

Atoms or molecules that have lost or gained one or more electrons, thus acquiring an electric charge.

Respective Charges

The specific electrical charges on particles or objects, usually defined as positive or negative, which determine their electromagnetic interactions.