1. Analyze the following two countries with linear production technologiesand one factor of production. The production technology is given by thefollowing labor requirements:Hot Dogs (labor per unit)Maple Syrup (labor per gallon)USA Canada1321Each country has 600 hours of labor.a. Which country has the absolute advantage in producing hot dogs?Explain.b. What is the opportunity cost of hot dogs in the US? In Canada?c. Which country has a comparative advantage in each good? Explain.d. What is the range of prices for each good under which both countrieswill gain from trade? Explain.e. Suppose that the world price of a unit of hot dogs is 1 gallon of maplesyrup. Draw a large, clear new graph for each country (put hot dogson the X axis) showing the autarky equilibrium and the free tradeequilibrium (including the trade triangle showing the levels ofimports and exports).f. Who gains from free trade in this model? Briefly explain why or whynot.

The following table shows the labor requirements in the production of hot dogs and maple syrup in…

1. Analyze the following two countries with linear production technologies and one factor of production. The production technology is given by the following labor requirements: Hot Dogs (labor per unit) Maple Syrup (labor per gallon) USA Canada 1 3 2 1 Each country has 600 hours of labor. a. Which country has the absolute advantage in producing hot dogs? Explain. b. What is the opportunity cost of hot dogs in the US? In Canada? c. Which country has a comparative advantage in each good? Explain.

1. Analyze the following two countries with linear production technologies and one factor of production. The production technology is given by the following labor requirements: Hot Dogs (labor per unit) Maple Syrup (labor per gallon) USA Canada 1 3 2 1 Each country has 600 hours of labor. a. Which country has the absolute advantage in producing hot dogs? Explain. b. What is the opportunity cost of hot dogs in the US? In Canada? c. Which country has a comparative advantage in each good? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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