5. The price of trade Suppose that France and Switzerland both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while Switzerland's opportunity cost of producing a crate of olives is 10 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that France and Switzerland consider trading olives and jeans with each other. France can gain from specialization and trade as long as it of jeans for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than of olives for each pair of jeans it exports to France. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Switzerland and France to gain from trade? Check all that apply. 9 pairs of jeans per crate of olives 1 pair of jeans per crate of olives 15 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives

5. The price of trade Suppose that France and Switzerland both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while Switzerland's opportunity cost of producing a crate of olives is 10 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that France and Switzerland consider trading olives and jeans with each other. France can gain from specialization and trade as long as it of jeans for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than of olives for each pair of jeans it exports to France. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Switzerland and France to gain from trade? Check all that apply. 9 pairs of jeans per crate of olives 1 pair of jeans per crate of olives 15 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Comparative advantage and gains from trade Consider two neighboring island countries called Contente and Euphoria. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Rye Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Contente 8 16 Euphoria 5 20 Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Euphoria uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Contente produces 8 million bushels of rye and 48 million pairs of jeans, and Euphoria produces 15 million bushels of rye and 20 million pairs of jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries, each country consumes the amount…
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socks. Boston socks. Chicago Without trade, the price of a pair of white socks (in terms of red socks) in Boston is red socks. Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour 3 3 2 1 has an absolute advantage in the production of red socks, and has a comparative advantage in the production of red socks, and If the cities trade with each other, Boston will export of red socks, and in Chicago it is has an absolute advantage in the production of white socks, and Chicago will export has a comparative advantage in the production of white of socks. The price of white socks can be expressed in terms of red socks. The highest price at which white socks can be traded that would make both cities better off is of red socks per pair of white socks, and the lowest price that makes both cities better off is of red socks per pair of white socks. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer…
1 Assume that Great Britain and the United States can both produce wheat (W) and cloth (C). The amount of wheat and cloth that each nation can produce in one day is presented in the table below. Comparative Advantage Wheat Cloth Great Britain 140 480 United States 1,120 560 Instructions: Round your answers to two decimal places. еВook a. Use the information above to compute the opportunity cost of 1 unit of wheat in each country. For Great Britain, the opportunity cost of producing 1 unit of wheat is 3.42 unit(s) of cloth. Print For the United States, the opportunity cost of producing 1 unit of wheat is 0.5 unit(s) of cloth. b. Use the information above to compute the opportunity cost of producing 1 unit of cloth in each country. References For Great Britain, the opportunity cost of producing 1 unit of cloth is 0.29 unit(s) of wheat. For the United States, the opportunity cost of producing 1 unit of cloth is 2 unit(s) of wheat. c. With mutually beneficial trade, wheat will be exported…
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In the following table, select the amount of each good that each country exports and Imports In the boxes across the row marked "Trade Action," and enter each country's final consumption of each good on the line marked "Consumption." When the two countries did not specialize, the total production of jeans was 17 million palrs per week, and the total production of rye was 46 million bushels per week. Because of specialization, the total production of jeans has increased by 3 million pairs per week, and the total production of rye has increased by 18 million bushels per week. Because the two countries produce more jeans and more rye under specialization, each country is able to gain from trade. Calculate the gains from trade-that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Dolorium Arcadia Jeans Rye…
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Desonia. Both countries produce grain and tea, each initially (i.e., before specialization and trade) producing 18 million pounds of grain and 9 million pounds of tea, as indicated by the grey stars marked with the letter A. Maldonia Desonia 48 48 42 42 36 36 PPF 30 24 18 PPF 18 12 12 9. 12 18 24 30 36 42 48 0. 6. 12 18 24 30 36 42 48 GRAIN (Millions of pounds) GRAIN (Millions of pounds) Maldonia has a comparative advantage in the production of while Desonia has a comparative advantage in the production of Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a TEA (Millions of pounds) 24 30 TEA (Millions…
5. The price of trade Suppose that Hungary and Norway both produce sunflowers and wheat. Hungary's opportunity cost of producing a bushel of wheat is 6 bushels of sunflowers while Norway's opportunity cost of producing a bushel of wheat is 12 bushels of sunflowers. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of sunflowers. Suppose that Hungary and Norway consider trading wheat and sunflowers with each other. Hungary can gain from specialization and trade as long as it receives more than of sunflowers for each bushel of wheat it exports to Norway. Similarly, Norway can gain from trade as long as of wheat for each bushel of sunflowers it exports to Hungary. it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of sunflowers) would allow both Norway and Hungary to gain from trade? Check…
With reference to Table 2 below, indicate in what commodity the U.S. and the Philippines have a comparative advantage? Table 2 COMMODITY U.S. Philippines Wheat (bushels/man-hour) 7 1 Rice (sacks/man-hour) 4 3
QUESTION 7 65+ 60+ 55 50 45 40 282828 35+ 30 25 20 15 10 5+ Cay China's PPF + 5 10 15 20 25 30 35 40 45 50 55 Computer OA. 40 cars and 20 computers B. 40 cars and zero computers C. 20 cars and 20 computers 个 Cor 65+ 60- 55 50+ 45+ Refer to figures above. Suppose that China and Japan fully specialize in the goods in which they have a comparative advantage. Trade is then initiated between the two countries and 20 units of cars are exchanged for 20 units of computers. How many units of cars and computers will China be able to consume after trade? D.40 cars and 40 computers 40- 35+ 30 25- 20 15 10- 5 Japan's PPF 5 10 15 20 25 30 35 40 45 50 55 60 Computer
1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Japan well as the PPE 6 L which country has an absolute advantage in produ f) Given all the information above, which country has a comparative advantage in producing cars? Which country has a comparative advantage in producing grain? Why? g) Both countries will spend half of each country's workers produce cars and half produce grain. Complete the following table with the quantities of cars produced and consumed in each country if there is no trade. Car Produced and Consumed (million) Tons of Grain Produced and Consumed (million) Germany Japan h) If each country only produces the good in which they have a comparative advantage and then traded 300 million tons of grain for 200 million cars, will both countries be better off? Why?