If a consultant earns P500 an hour from his consulting jobs but can also type better and faster than his secretary who gets P50 per hour, does it pay for the consultant to fire his secretary and do his own typing? (Justify your answer by relating this to the law of comparative advantage.)
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If a consultant earns P500 an hour from his consulting jobs but can also type better and faster than his secretary who gets P50 per hour, does it pay for the consultant to fire his secretary and do his own typing? (Justify your answer by relating this to the law of
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- Which country has an absolute advantage in the production of coffee?Suppose there exist two imaginary countries, Everglades and Denali. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Country Almonds Shorts (Pounds per hour of labor) (Pairs per hour of labor) Everglades 5 20 Denali 8 16 Suppose that initially Denali uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Everglades uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Everglades produces 15 million pounds of almonds and 20 million pairs of shorts, and Denali produces 8 million pounds of almonds and 48 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two…Consider two neighboring island countries called Euphoria and Contente. They each have 4 million labor hours available per month 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) Euphoria 5 20 Contente 8 16 Initially, suppose Contente uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Euphoria uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Euphoria produces 15 million bushels of rye and 20 million pairs of jeans, and Contente produces 8 million bushels of rye and 48 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 of rye and jeans it produces. of jeans,…
- Suppose there exist two imaginary countries, Congaree and Yosemite. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor.Imagine that Beth is the best florist in the world and the best pianist in the world. But can earn more as a florist than a pianist. Using this example explain the difference between comparative and absolute advantage and tell us what profession Beth should pick.Bill and Melinda work for a firm that creates web pages and apps. The number of web page designs and apps each can produce in a week is given in the table below. Output per Week web pages designed apps created Bill 3 12 Melinda 2 4 Melinda has a comparative advantage in: Group of answer choices designing web pages creating apps both designing web pages and creating apps . neither designing web pages or in creating apps
- Both Bob and Laura can work 6 hours per day in either market work for a wage or in home production. In particular, they can work at home to make meals or work in the labor market to purchase ingredients for those meals. Their production possibilities per hour are in the table below. Imagine Laura and Bob get married to enjoy the economic gains from specialization and division of labor in marriage, and the person who has the comparative advantage in cooking meals specializes in cooking meals while the person with the comparative advantage in labor market works specializes in labor market work. If they still need to each eat 3 meals per day (for a total of 6 meals), what are Bob and Laura's joint gains from marriage in terms of purchased ingredients? Bob Laura Numeric Response Meals per hour $ of Ingredients per hour 1 1 20 15I only need help in the 3 last questions Q1. The following table shows the output of rice and machinery one labor hour can produce in Mexico and Thailand: Rice Machinery Thailand 6 2 Mexico 2 1 What are the marginal products of labor in rice and machinery production in Thailand? What about Mexico? Which country has an absolute advantage in rice and which country has an absolute advantage in machinery? What is the autarkic price ratio of machinery relative to rice in each country? Which country has a comparative advantage in rice and which country has a comparative advantage in machinery? Suppose Mexico has 1,000 labor hours available. Construct the production-possibility frontier (PPF) and identify the optimal autarky equilibrium (using an indifference curve) for Mexico. Suppose the international price is set at 1 machinery:2.5 rice and Mexico decides to completely specialize in producing the product in which it has a comparative advantage. How would…Explain how the theory of absolute advantage conflicts with the theory of mercantilism
- When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce lemons and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. (? (?) Maldonia Lamponia 64 64 56 56 48 PPF 48 40 40 32 32 24 24 PPF 16 16 16 24 32 40 48 56 64 16 24 32 40 48 56 64 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of production of while Lamponia has a comparative advantage in the . Suppose that Maldonia and Lamponia specialize in the production of the goods in which each has a comparative advantage.…Consider two neighboring island countries called Arcadia 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. Country Arcadia Euphoria Rye (Bushels per hour of labor) 8 5 Jeans (Pairs per hour of labor) 16 20 Initially, suppose Arcadia 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, Arcadia 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 of rye and jeans it produces. of jeans, and…Consider an international economy consisting of USA and China. There are two factors: capital (K) and labor (L) and two goods: manufacture(M) and food (F): The two countries share the same constant returns to scale production functions. Representative consumers of the two countries share the same homothetic welfare functions with usual properties. At autarky (before trade) and after trade opens, both countries produce both goods. All the prices are in terms of units of food. Thus, the price of food is 1: The USA is capital abundant: Here, L and K are USA endowments of labor and capital and Land Kare Chinese endowments of labor and capital. Assume that food industry is capital intensive and manufacturing is labor intensive. All markets are competitive. (a) Define the following terms: manufacture industry is labor intensive. (b) Draw how the relative supply curves of USA and China might look like and explain their relative positions using the Rybczynski theorem. Use PM/PFon the…
