5. The price of trade Suppose that Portugal and Denmark both produce jeans and cheese. Portugal's opportunity cost of producing a pound of cheese is 4 pairs of jeans while Denmark's opportunity cost of producing a pound of cheese is 10 pairs of jeans. By comparing the opportunity cost of producing cheese in the two countries, you can tell that production of cheese and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that Portugal and Denmark consider trading cheese and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each pound of cheese it exports to Denmark. Similarly, Denmark can gain from trade as long as it of cheese for each pair of jeans it exports to Portugal. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of jeans) would allow both Denmark and Portugal to gain from trade? Check all that apply. 1 pair of jeans per pound of cheese 6 pairs of jeans per pound of cheese 8 pairs of jeans per pound of cheese 18 pairs of jeans per pound of cheese.

5. The price of trade Suppose that Portugal and Denmark both produce jeans and cheese. Portugal's opportunity cost of producing a pound of cheese is 4 pairs of jeans while Denmark's opportunity cost of producing a pound of cheese is 10 pairs of jeans. By comparing the opportunity cost of producing cheese in the two countries, you can tell that production of cheese and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that Portugal and Denmark consider trading cheese and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each pound of cheese it exports to Denmark. Similarly, Denmark can gain from trade as long as it of cheese for each pair of jeans it exports to Portugal. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of jeans) would allow both Denmark and Portugal to gain from trade? Check all that apply. 1 pair of jeans per pound of cheese 6 pairs of jeans per pound of cheese 8 pairs of jeans per pound of cheese 18 pairs of jeans per pound of cheese.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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…
3. Gains from trade Suppose there exist two imaginary countries, Everglades and Yosemite. Their labor forces are each capable of supplying four million hours per day that can be used to produce chinos, pistachios, or some combination of the two. The following table shows the amount of chinos or pistachios that can be produced by one hour of labor. Country Everglades Yosemite Chinos Pistachios (Pairs per hour of labor) (Pounds per hour of labor) 5 20 8 16 Suppose that initially Yosemite uses 1 million hours of labor per day to produce chinos and 3 million hours per day to produce pistachios, while i Everglades uses 3 million hours of labor per day to produce chinos and 1 million hours per day to produce pistachios. As a result, Everglades produces 15 million pairs of chinos and 20 million pounds of pistachios, and Yosemite produces 8 million pairs of chinos and 48 million pounds of pistachios. Assume there are no other countries willing to engage in trade, so, in the absence of trade…
5. The price of trade Suppose that Portugal and Germany both produce beer and wine. Portugal's opportunity cost of producing a bottle of wine is 3 barrels of beer while Germany's opportunity cost of producing a bottle of wine is 11 barrels of beer. By comparing the opportunity cost of producing wine in the two countries, you can tell that Portugal v has a comparative advantage in the production of wine and Germany v has a comparative advantage in the production of beer. Suppose that Portugal and Germany consider trading wine and beer with each other. Portugal can gain from specialization and trade as long as it receives more than 3 barrels v of beer for each bottle of wine it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than 1/11 bottle v of wine for each barrel of beer it exports to Portugal. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of beer) would allow both Germany and…
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…
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?
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…
The graph shows the PPC for a country that can produce coffee or butter. Pounds of coffee (thousands) 3 4 5 6 Pounds of butter (thousands) O True 8 The straight line is the trade line and CPC if production is at Point A. This country has a comparative advantage in coffee. O False h
5. The price of trade Suppose that Poland and Liechtenstein both produce ale and shoes. Poland's opportunity cost of producing a pair of shoes is 5 kegs of ale while Liechtenstein's opportunity cost of producing a pair of shoes is 12 kegs of ale. By comparing the opportunity cost of producing shoes in the two countries, you can tell that production of shoes and has a comparative advantage in the production of ale. has a comparative advantage in the Suppose that Poland and Liechtenstein consider trading shoes and ale with each other. Poland can gain from specialization and trade as long as it receives more than of ale for each pair of shoes it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long as it of shoes for each keg of ale it exports to Poland. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of ale) would allow both Liechtenstein and Poland to gain from trade? Check…
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