Essay - Cross-border Trade 1) Poland Has the Absolute Advantage in M...

Cross-Border Trade

1) Poland has the absolute advantage in M production. It can produce 1.00 output per labor hour and has 40 million labor hours per year. Thus, Pol***** can ***** 40 million ********** ***** year of *****, versus 1 million outputs per year in Slovakia, which only produce 0.05 outputs per labor hour. This gives Poland the absolute competitive ***** in M production.

2) ***** has ***** absolute disadvantage ***** P *****. It ***** produce 0.*****0 output per labor hour and has 20 labor hours, so 2 million outputs of potatoes. *****oland can ***** 5 million outputs of *****, or 0.125 ***** per hour. *****, Poland has the absolute competitive advantage in P production and Slovakia the absolute competitive dis*****.

*****) *****oland has ***** comparative advantage in M production. The relative productivity of a meat worker ***** Poland is 8, compared with Slovakia's 0.5.

*****) Slovakia ***** the ***** advantage in P production. The ***** productivity ***** a potato worker ***** Slovakia ***** 2, ***** with Poland's 0.125. Thus, while Slovakia has the absolute competitive disadvantage in P production, it does have the comparative advantage.

5) No, this trade is not mutually beneficial. Under these terms, ***** would end up with 1kg of P and 0.5kg ***** M. This point is below their ***** possibilities curve. For Pol*****, they would receive 1 kg of P and 39.5 of M. This is at a point ********** their production possibilities curve. So the trade ***** beneficial for Poland, but ***** for Slovakia. Hence, ***** trade is not mutually