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2. Consider the following Ricardian example, using standard Ricardian assumption: Vintland Moonited Labour hours per bottle of wine 7.5 Labour hours per kg of cheese 2 a) Which country has an absolute advantage in wine? In Cheese? b) Which country has a comparative advantage in wine? Cheese? (Calculate the opportunity cost of wine and cheese in each country.) Put the numbers in the following table: Vintland Moonited Wine price Cheese price c) Suppose that Vintland has 10 million hours of labour and Moonited has 15 million hours of labour. Graph each country’s production possibilities curve. If Vintland produces 3 million cheese and Moonited produces 1.5 million kilos of cheese, how much wine is produced by each country? Show all on graph.

2. Consider the following Ricardian example, using standard Ricardian assumption: Vintland Moonited Labour hours per bottle of wine 7.5 Labour hours per kg of cheese 2 a) Which country has an absolute advantage in wine? In Cheese? b) Which country has a comparative advantage in wine? Cheese? (Calculate the opportunity cost of wine and cheese in each country.) Put the numbers in the following table: Vintland Moonited Wine price Cheese price c) Suppose that Vintland has 10 million hours of labour and Moonited has 15 million hours of labour. Graph each country’s production possibilities curve. If Vintland produces 3 million cheese and Moonited produces 1.5 million kilos of cheese, how much wine is produced by each country? Show all on graph.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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d) When trade opened which country exports which good? Suppose the international price is ½ bottle of wine per kilo of cheese, what happens to production in each country (in terms of specialization of goods)? e) In this free-trade equilibrium, 2 million kilos of cheese and 1 million bottle of wine are traded. What is the consumption point in each country with free trade? Show this graphically. Also show vertical and horizontal intercepts of the trade lines for each country. f) Does each country gain from trade? Explain, referring to your graphs as is appropriate.
Transcribed Image Text:d) When trade opened which country exports which good? Suppose the international price is ½ bottle of wine per kilo of cheese, what happens to production in each country (in terms of specialization of goods)? e) In this free-trade equilibrium, 2 million kilos of cheese and 1 million bottle of wine are traded. What is the consumption point in each country with free trade? Show this graphically. Also show vertical and horizontal intercepts of the trade lines for each country. f) Does each country gain from trade? Explain, referring to your graphs as is appropriate.
2. Consider the following Ricardian example, using standard Ricardian assumption: Vintland Moonited Labour hours per bottle of wine 7.5 Labour hours per kg of cheese 5 a) Which country has an absolute advantage in wine? In Cheese? b) Which country has a comparative advantage in wine? Cheese? (Calculate the opportunity cost of wine and cheese in each country.) Put the numbers in the following table: Vintland Moonited Wine price Cheese price c) Suppose that Vintland has 10 million hours of labour and Moonited has 15 million hours of labour. Graph each country's production possibilities curve. If Vintland produces 3 million cheese and Moonited produces 1.5 million kilos of cheese, how much wine is produced by each country? Show all on graph.
Transcribed Image Text:2. Consider the following Ricardian example, using standard Ricardian assumption: Vintland Moonited Labour hours per bottle of wine 7.5 Labour hours per kg of cheese 5 a) Which country has an absolute advantage in wine? In Cheese? b) Which country has a comparative advantage in wine? Cheese? (Calculate the opportunity cost of wine and cheese in each country.) Put the numbers in the following table: Vintland Moonited Wine price Cheese price c) Suppose that Vintland has 10 million hours of labour and Moonited has 15 million hours of labour. Graph each country's production possibilities curve. If Vintland produces 3 million cheese and Moonited produces 1.5 million kilos of cheese, how much wine is produced by each country? Show all on graph.
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