Consider two neighboring island countries, Botoga and Doporia. Each has 900,000 labor hours available per week that it can use to produce wheat, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of wheat or 1 pair of jeans. Wheat Jeans Country (Labor hours per bushel) (Labor hours per pair) Botoga 40 10 Doporia 36 6 _______ (Botoga / Neither / Doporia) has an absolute advantage in the production of wheat, and ______ (Botoga / Neither / Doporia) has an absolute advantage in the production of jeans. Initially, suppose Botoga uses 225,000 hours of labor per week to produce wheat and 675,000 hours per week to produce jeans, while Doporia uses 675,000 hours of labor per week to produce wheat and 225,000 hours per week to produce 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 of wheat and jeans it produces. Botoga’s opportunity cost of producing 1 bushel of wheat is ______ (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans, and Doporia’s opportunity cost of producing 1 bushel of wheat is _______ (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans. Therefore, ______ (Botoga / Doporia) has a comparative advantage in the production of wheat, and ______ (Botoga / Doporia) has a comparative advantage in the production of jeans. When neither country specializes, the total production of wheat is _____ bushels per week, and the total production of jeans is _____ pairs per week. Suppose that Botoga completely specializes in the production of the good in which it has a comparative advantage, producing only that good. It will produce ______ _______(Bushels of wheat / Pairs of jeans). Suppose also that Doporia does not specialize and uses 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans. It will produce ______ bushels of wheat and ______ pairs of jeans. Suppose Botoga and Doporia agree to trade with each other, exchanging 14,000 bushels of wheat for 70,000 pairs of jeans. In particular, Botoga will export the goods it produces, and Doporia will export the goods that Botoga does not produce. With trade, Botoga will ______(Import / Export) wheat and ______(Import / Export) jeans. Doporia will _____(Import / Export) wheat and ______(Import / Export) jeans. When Botoga specializes and Doporia still produces the combination of goods using 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans, the total production of wheat becomes _______ bushels per week, and the total production of jeans becomes ______ pairs per week.

Consider two neighboring island countries, Botoga and Doporia. Each has 900,000 labor hours available per week that it can use to produce wheat, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of wheat or 1 pair of jeans. Wheat Jeans Country (Labor hours per bushel) (Labor hours per pair) Botoga 40 10 Doporia 36 6 ___ (Botoga / Neither / Doporia) has an absolute advantage in the production of wheat, and (Botoga / Neither / Doporia) has an absolute advantage in the production of jeans. Initially, suppose Botoga uses 225,000 hours of labor per week to produce wheat and 675,000 hours per week to produce jeans, while Doporia uses 675,000 hours of labor per week to produce wheat and 225,000 hours per week to produce 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 of wheat and jeans it produces. Botoga’s opportunity cost of producing 1 bushel of wheat is (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans, and Doporia’s opportunity cost of producing 1 bushel of wheat is _ (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans. Therefore, (Botoga / Doporia) has a comparative advantage in the production of wheat, and (Botoga / Doporia) has a comparative advantage in the production of jeans. When neither country specializes, the total production of wheat is _ bushels per week, and the total production of jeans is _ pairs per week. Suppose that Botoga completely specializes in the production of the good in which it has a comparative advantage, producing only that good. It will produce _(Bushels of wheat / Pairs of jeans). Suppose also that Doporia does not specialize and uses 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans. It will produce bushels of wheat and pairs of jeans. Suppose Botoga and Doporia agree to trade with each other, exchanging 14,000 bushels of wheat for 70,000 pairs of jeans. In particular, Botoga will export the goods it produces, and Doporia will export the goods that Botoga does not produce. With trade, Botoga will (Import / Export) wheat and (Import / Export) jeans. Doporia will _(Import / Export) wheat and (Import / Export) jeans. When Botoga specializes and Doporia still produces the combination of goods using 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans, the total production of wheat becomes _ bushels per week, and the total production of jeans becomes ____ pairs per week.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Absolute and comparative advantage

	Wheat	Jeans
Country	(Labor hours per bushel)	(Labor hours per pair)
Botoga	40	10
Doporia	36	6

_______ (Botoga / Neither / Doporia) has an absolute advantage in the production of wheat, and ______ (Botoga / Neither / Doporia) has an absolute advantage in the production of jeans.

Initially, suppose Botoga uses 225,000 hours of labor per week to produce wheat and 675,000 hours per week to produce jeans, while Doporia uses 675,000 hours of labor per week to produce wheat and 225,000 hours per week to produce 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 of wheat and jeans it produces.

Botoga’s opportunity cost of producing 1 bushel of wheat is ______ (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans, and Doporia’s opportunity cost of producing 1 bushel of wheat is _______ (1/4pair / 1/6pair / 4 pairs / 6 pairs) of jeans. Therefore, ______ (Botoga / Doporia) has a comparative advantage in the production of wheat, and ______ (Botoga / Doporia) has a comparative advantage in the production of jeans.

When neither country specializes, the total production of wheat is _____ bushels per week, and the total production of jeans is _____ pairs per week.

Suppose that Botoga completely specializes in the production of the good in which it has a comparative advantage, producing only that good. It will produce ______ _______(Bushels of wheat / Pairs of jeans). Suppose also that Doporia does not specialize and uses 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans. It will produce ______ bushels of wheat and ______ pairs of jeans.

Suppose Botoga and Doporia agree to trade with each other, exchanging 14,000 bushels of wheat for 70,000 pairs of jeans. In particular, Botoga will export the goods it produces, and Doporia will export the goods that Botoga does not produce.

With trade, Botoga will ______(Import / Export) wheat and ______(Import / Export) jeans. Doporia will _____(Import / Export) wheat and ______(Import / Export) jeans.

When Botoga specializes and Doporia still produces the combination of goods using 225,000 hours of labor to produce wheat and 675,000 hours of labor to produce jeans, the total production of wheat becomes _______ bushels per week, and the total production of jeans becomes ______ pairs per week.

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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