2. American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Which country has a comparative advantage in producing cars? In producing grain? Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce? Starting from a position without trade, give an example in which trade makes each country better off.
2. American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Which country has a comparative advantage in producing cars? In producing grain? Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce? Starting from a position without trade, give an example in which trade makes each country better off.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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2. American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things
simple, assume that each country has 100 million workers.
- Which country has a
comparative advantage in producing cars? In producing grain?
- Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce?
- Starting from a position without trade, give an example in which trade makes each country better off.
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