In the absence of trade, assume Andy and Jack divide their time equally between the two activities. Then, Andy and Jack decide to trade with each other and specialize in the product in which they have a comparative advantage. Explain with words+graphs/tables/computations in which trade makes each person better

In the absence of trade, assume Andy and Jack divide their time equally between the two activities. Then, Andy and Jack decide to trade with each other and specialize in the product in which they have a comparative advantage. Explain with words+graphs/tables/computations in which trade makes each person better

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Randy and Frank are both landscapers. Randy can mow 12 lawns per day or prune 15 trees. Frank can mow 16 lawns per day or prune 24 trees. Randy and Frank each work 240 days per year. a. Determine who has the absolute advantage at each task, what their respective opportunity costs are for mowing a lawn, and who has comparative advantage in each task. (Click to select) (Click to select) The opportunity cost of mowing a lawn for Randy is The opportunity cost of mowing a lawn for Frank is (Click to select) ✓has a comparative advantage in mowing lawns. (Click to select) has a comparative advantage in pruning trees. b. Assuming that only one of the tasks is performed, then together Randy and Frank can service a maximum of lawns or trees each year. ✓has an absolute advantage in mowing lawns. ✓has an absolute advantage in pruning trees. trees. trees. c. If each landscaper fully specializes according to his comparative advantage, then the maximum number of lawns that can be mowed annually is…
Macmillan Learning The accompanying graph shows the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses. The PPF shows the quantities of rubber band balls and rubber hoses Rubberland can produce in one day. Point A represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than it originally made at point A but still maximizes its output. Move point A to the new combination of the two goods. How many more rubber hoses does Rubberland now produce per day than before? Quantity of rubber band balls 200 180 160 140 120 100 Rubberland's Production Possibilities A 80 60 40 642 20 PPF 0 0 10 30 20 40 50 60 70 Quantity of rubber hoses 80 90 100 80 20 more hoses per day
Suppose that country A and country B start trading; 1 unit of cotton is exchanged with 1 unit of wheat. Draw the trade line into their PPF.
Use the PPF to answer the following questions: (a) At point F, how many sweaters are being produced? How many hard drives? (b) Label points A-H as either efficient, inefficient, or unattainable. (c) Can we determine if point F is productively efficient? If so, is it productively efficient? (d) Can we determine if point F is allocatively efficient? If so, is it allocatively efficient?
If Sport Country currently produces 100 bats and 400 rackets, what is the opportunity cost of an additional 100 bats? rackets. (only provide numbers, no alphabets or special characters). If Sport Country currently produces 300 bats and 300 rackets, what is the opportunity cost of an additional 100 bats? rackets. (only provide numbers, no alphabets or special characters). Suppose Sport Country currently produces 200 bats and 200 rackets. How many additional rackets could they produce without giving up any bats? rackets. (only provide numbers, no alphabets or special characters).
Assume there are only two goods in the world: pizza and electric fans. Draw a production possibility frontier (PPF) illustrating the trade-off between the two (specific numbers are not needed – we are only looking for the basic shape of the PPF). On the same graph, draw new frontiers showing 1) what happens if a major plague reduced worldwide population significantly, and 2) if a machine is invented which doubles the number of fans that can be made in a day (but is irrelevant in the production of pizza).
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 Glacier and Rainier. Both countries produce corn and basil, each initially (i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of basil, as indicated by the grey stars marked with the letter A. BASIL (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF 6 Glacier A 12 18 24 30 36 CORN (Millions of pounds) 42 48 ? BASIL (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF I + 6 Rainier 12 18 24 30 36 CORN (Millions of pounds) I 42 48 (?) Glacier has a comparative advantage in the production of while Rainier has a comparative advantage in the production of Suppose that Glacier and Rainier specialize in the production…
Suppose you have a team of two workers: one is a baker and one is a chef. Your baker is talented but is inexperienced. Your chef is not only an elite chef but is also faster at baking. If your kitchen specialized according to absolute advantage, who would do the cooking? Who would do the baking? If your kitchen specialized according to comparative advantage, who would do the cooking? Who would do the baking? Which approach above is more efficient? Explain your answer.
This question is a file-upload question. Work your answer in a piece of paper, take a picture with your phone and upload the file. Using the table below answer the following: Points Soda Pizza A 10 В 1 6 3 a) Draw a PPF map (put soda in the vertical axis and pizza in the horizontal axis), showing all the points on the PPF. b) What is the opportunity cost of an extra pizza when you are on segment AB? What about when you are at segment CD? (i.e., how many sodas you have to give up in order to get an extra pizza? SHOW YOUR WORK!) c) What is your PPF's shape? Is it a straight line or does it have a bowed outward shape? Justify! d) Suppose that there is a new technology that affects ONLY the production of soda. Illustrate this effect on your PPF map.