Figure 1. The PPFs of Nation 1 and Nation 2 Nation 1 Nation 2 Corn Corn Tons) B' B Bananas (tons) Bananas 1) Nation 1 has decreasing opportunity costs in the production of bananas and, with specialization, produces at point B. 2) Nation 1 has increasing opportunity costs in the production of bananas and, with specialization, produces at point B. 3) Nation 1 has increasing opportunity costs in the production of corn and, with specialization, produces at point B. Nation 1 has increasing opportunity costs in the production of bananas and, A'

Figure 1. The PPFs of Nation 1 and Nation 2 Nation 1 Nation 2 Corn Corn Tons) B' B Bananas (tons) Bananas 1) Nation 1 has decreasing opportunity costs in the production of bananas and, with specialization, produces at point B. 2) Nation 1 has increasing opportunity costs in the production of bananas and, with specialization, produces at point B. 3) Nation 1 has increasing opportunity costs in the production of corn and, with specialization, produces at point B. Nation 1 has increasing opportunity costs in the production of bananas and, A'

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 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...

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Similar questions

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
How does comparative advantage lead to gains from trade?
If trade increases world GDP by 1 per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lankas GDP.
The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialize based on comparative advantage, the total gains from specialization and trade are
Germany Production Possibilities (Production Alternatives) Product A B C D E F Autos 0 4 8 12 16 20 Chemicals 40 32 24 16 8 0 U.S. Production Possibilities (Production Alternatives) Product A B C D E F Autos 0 3 6 9 12 15 Chemicals 60 48 36 24 12 0 Refer to the accompanying production possibilities tables. Data are in millions of units. Suppose that each nation specialized in producing the product for which it has a comparative advantage and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and Multiple Choice 12 million units of chemicals. 24 million units of chemicals. 36 million units of chemicals. 48 million units of chemicals.
With respect to Table 2.5, indicate in each case the commodity in which each nation has a comparative advantage. Suppose that the US exchanges 4W for 4C with the UK. How much does the US gain in terms of cloth? How much does the UK gain in terms of cloth? What is the range for mutually beneficial trade?
This is all one thing
Imagine that it takes an average Australian miner 10 hours to mine a metric ton of coal and 20 hours to mine a metric ton of manganese. It takes the average South African miner 4 hours to mine a metric ton of coal and 12 hours to mine metric ton of manganese.Create a table to show how productive each miner is in a day. a. In what task does each miner have a comparative advantage? b. Which resource will each country import? How about export? c. Explain how markets provide the opportunity for the mining companies to specialize and earn gains from trade.
The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative B and for the United States is alternative U. China Production Possibilities в Product Apparel (in thousands) Chemicals (in tons 30 24 18 12 12 18 24 30 U.S. Production Possibilities Product R T. Apparel (in thousands) Chemicals (in tona) 10 2. 16 4. 8. 12 20 Instructions: Enter your answers as whole numbers. a. Are comparative-cost conditions such that the two areas should specialize? [(Click to select) If so, what product should each produce? China should produce [(Cick to select) The United States should produce (Cick to select) b. What is the total gain in apparel and chemical output that would result from such specialization? Apparel:
30. If the Portuguese were to insist on consuming 90 bottles of wine, what does that imply for trade between these countries? There would be no trade. The Portuguese would be consuming beyond their production possibilities frontier. The English would benefit from producing their own wine. Both countries would benefit more. None of the above.