2. With a given quantity of economic resources, the US can produce 3 units of food or 8 units of fun. With the same quantity of economic resources, Japan can produce 4 units of food or 6 units of fun. Assuming that the economic resources are of the same quality in both countries, a. Which country has absolute advantage in production of food and fun? b. Which country has absolute advantage in production of food? c. Which country has absolute advantage in production of fun? d. Which country has comparative advantage in production of food? e. Which country has comparative advantage in production of fun? f. Which country will export food? g. Which country will export fun?

2. With a given quantity of economic resources, the US can produce 3 units of food or 8 units of fun. With the same quantity of economic resources, Japan can produce 4 units of food or 6 units of fun. Assuming that the economic resources are of the same quality in both countries, a. Which country has absolute advantage in production of food and fun? b. Which country has absolute advantage in production of food? c. Which country has absolute advantage in production of fun? d. Which country has comparative advantage in production of food? e. Which country has comparative advantage in production of fun? f. Which country will export food? g. Which country will export fun?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Look at F where it says Liz has comparative advantage. Why is it that she has comparative advantage over mike in cleaning windows when mike has comparative advantage in picking up leaves? What’s the difference?
The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFs. Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a comparative advantage. a. What will each country produce? a. Honduras will produce both goods. b. Brazil will produce both goods. c. Honduras will produce bananas and Brazil steel. d. Honduras will produce steel and Brazil bananas. b. Suppose each country specializes in the production of the good for which it has a comparative advantage, and they trade at a price of of 4,000 tons of steel for 6,000 tons of bananas. Place the points labeled "Post Trade Consumption" to show the amounts of bananas and steel each country will have to consume after they trade. (look at image)
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Self Check question #4- a,b,c,d,e
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