3. Two countries, Taiwan and Korea, produce two goods, avionics and integrated circuits (ICs), using the same technologies and the same factor endowments. Both countries face increasing costs of production. Koreans' taste is biased towards ICs -- that is, compared to the Taiwanese, Koreans have a relatively strong preference for ICs. a. Use a single PPF graph with ICs on the horizontal axis to show each country's complete autarky equilibrium. b. Show on your PPF graph of part a. what will happen when Taiwan and Korea trade with each other. Be sure to indicate clearly on your graph each country's FT consumption, FT production, X, and M. Show the gains from trade and explain intuitively why each country gains from trade. c. Decompose the gains from trade for Korea using the PPF graph; feel free to draw a new PPF graph rather than using the one from part a. Explain as fully as possible what you must do and, using the appropriate terms, indicate the different types of gains from free trade.

3. Two countries, Taiwan and Korea, produce two goods, avionics and integrated circuits (ICs), using the same technologies and the same factor endowments. Both countries face increasing costs of production. Koreans' taste is biased towards ICs -- that is, compared to the Taiwanese, Koreans have a relatively strong preference for ICs. a. Use a single PPF graph with ICs on the horizontal axis to show each country's complete autarky equilibrium. b. Show on your PPF graph of part a. what will happen when Taiwan and Korea trade with each other. Be sure to indicate clearly on your graph each country's FT consumption, FT production, X, and M. Show the gains from trade and explain intuitively why each country gains from trade. c. Decompose the gains from trade for Korea using the PPF graph; feel free to draw a new PPF graph rather than using the one from part a. Explain as fully as possible what you must do and, using the appropriate terms, indicate the different types of gains from free trade.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Parts a and b in the pic please
If country A uses all of its resources efficiently, it can produce a maximum of 100 units of good X. If country A uses all of its resources efficiently, it can produce a maximum of 150 units of good Y. If country B uses all of its resources efficiently, it can produce a maximum of 75 units of good X. If country B uses all of its resources efficiently, it can produce a maximum of 125 units of good Y. Both countries have (linear) straight line PPFs. What is the opportunity cost of producing 10 units of X in country A? (hint: your answer should be measured in the positive number of units of good Y that must be given up - round your answer to two decimal places only if necessary)
Suppose that there are two countries, the North and the South. Given the North's resources, it can produce 4 Cars in an hour or 1 unit of wheat in an hour. Given the South's resources, it can produce 1 car per hour or 4 units of wheat in an hour. Both countries have forty hours in total to produce wheat and cars. Finally, the goal of each country is to have the most possible cars and wheat, but also to always have an equal amount of each. In other words, 10 cars and 10 wheat is just as valuable as 11 cars and 10 units of wheat, or 10 cars and 11 units of wheat, but 11 cars and 11 wheat would make the country even better off. The question below relates to the PPF for the North and the South. While you do not need to turn in a graph of the PPF, they may be helpful to answer these questions. Finally, the first set of questions refers to a world where the North and South cannot trade, while the second set of questions refers to a world where they can trade. In the latter set of…
Assume there are only two goods in the world: pizza and electric fans. Draw a production possibility frontier (PPF) illustrating the trade-off between the two (specific numbers are not needed – we are only looking for the basic shape of the PPF). On the same graph, draw new frontiers showing 1) what happens if a major plague reduced worldwide population significantly, and 2) if a machine is invented which doubles the number of fans that can be made in a day (but is irrelevant in the production of pizza).
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2. Suppose that two countries can produce wheat or cotton. If country A produces only wheat it can produce 55 units of wheat, and if it produces only cotton it can produce 35 units of cotton. If country B produces only wheat it can produce 65 units of wheat, and if it produces only cotton it can produce 45 units of cotton. Given the production possibilities curves above, which of the following would be feasible terms of trade between country A and country B? a. one unit of wheat for 0.75 unit of cotton. b. one unit of cotton for 1.5 units of wheat. c. one unit of wheat for 0.55 unit of cotton. d. one unit of cotton for 1.67 units of wheat. e. all of the above are feasible terms of trade. f. none of the above are feasible terms of trade.
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