5. Suppose 2 separate economies can produce either Boats or Cars according to the following table. Assume each economy has a linear PPC (for mathematical ease). Waterworld Robotland All Boats (with no Cars) All Cars (with no Boats) 50 100 60 60 a. If there is no trade between these economies, Waterworld will produce 20 Boats and Robotland will produce 30 Boats. Assuming each produces on their PPC, how many Cars would each economy produce? Graph each economy's PPC and this "autarky" combination. b. If these economies were to trade with each other, which country would have comparative advantage in Boat production? How about Car production? Show the work to prove your answer. c. If each economy specializes in their comparative advantage good, state a mutually beneficial trade that would allow BOTH economies to end up with more of BOTH goods than they were able to achieve in the answer to part a.

5. Suppose 2 separate economies can produce either Boats or Cars according to the following table. Assume each economy has a linear PPC (for mathematical ease). Waterworld Robotland All Boats (with no Cars) All Cars (with no Boats) 50 100 60 60 a. If there is no trade between these economies, Waterworld will produce 20 Boats and Robotland will produce 30 Boats. Assuming each produces on their PPC, how many Cars would each economy produce? Graph each economy's PPC and this "autarky" combination. b. If these economies were to trade with each other, which country would have comparative advantage in Boat production? How about Car production? Show the work to prove your answer. c. If each economy specializes in their comparative advantage good, state a mutually beneficial trade that would allow BOTH economies to end up with more of BOTH goods than they were able to achieve in the answer to part a.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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