10. What factors does Paul Krugman identify that supported expanding international trade in the 1800s?

11. Is it possible to have a comparative advantage in the production of a good but not to have an absolute

advantage? Explain.

12. How does comparative advantage lead to gains from trade?

13. What is intra-industry trade?

14. What are the two main sources of economic gains from intra-industry trade?

15. What is splitting up the value chain?

16. Are the gains from international trade more likely to be relatively more important to large or small

countries?

Critical Thinking Questions

17. Are differences in geography behind the differences in absolute advantages?

18. Why does the United States not have an absolute advantage in coffee?

19. Look at Exercise 19.2. Compute the opportunity costs of producing sweaters and wine in both France and

Tunisia. Who has the lowest opportunity cost of producing sweaters and who has the lowest opportunity
{"producer": "Prince 14.2 (www.princexml.com)", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "batch_upload": true, "file_size_mb": 26.99, "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:37:44.339247", "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_uploader", "total_pages": 597, "creator": "PDFMiner", "file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00"}