Analyze the following two countries with linear (constant opportunity cost) production functions. The production technology is given by the following unit labor requirements: United States Mexico (*) Hats 1 4 Shoes 3 The total labor endowment in each country is 40 hrs. (a) Graph the PPF's for the US and Mexico (put Shoes on the vertical axis). (b) Which country has an absolute advantage in which good? Explain. (c) Which country has a comparative advantage in which good? Explain.
Analyze the following two countries with linear (constant opportunity cost) production functions. The production technology is given by the following unit labor requirements: United States Mexico (*) Hats 1 4 Shoes 3 The total labor endowment in each country is 40 hrs. (a) Graph the PPF's for the US and Mexico (put Shoes on the vertical axis). (b) Which country has an absolute advantage in which good? Explain. (c) Which country has a comparative advantage in which good? Explain.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 31P: Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil...
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