Q1. Let suppose in the world there is two country, Country X and Country Y. In country X there is only one worker A while on country Y the worker is B. And both can produce sugar and wheat. But the country B is specialized in producing wheat and the other one in sugar. Suppose that the A and the B each work 40 hours a week and can devote this time to growing sugar, raising wheat, or a combination of the both. The person A can produce a pound of sugar in 10 hours and a pound of wheat in 20 hours. The B, who is more productive in both activities, can produce a pound of Sugar in 8 hours and a pound of meat in 1 hour. (a) Draw the Production Possibilities Frontiers for both workers? (b) Whose have absolute and comparative advantage? (c) Why they move toward trade? (d) Graphically shows the gain from trade.

Q1. Let suppose in the world there is two country, Country X and Country Y. In country X there is only one worker A while on country Y the worker is B. And both can produce sugar and wheat. But the country B is specialized in producing wheat and the other one in sugar. Suppose that the A and the B each work 40 hours a week and can devote this time to growing sugar, raising wheat, or a combination of the both. The person A can produce a pound of sugar in 10 hours and a pound of wheat in 20 hours. The B, who is more productive in both activities, can produce a pound of Sugar in 8 hours and a pound of meat in 1 hour. (a) Draw the Production Possibilities Frontiers for both workers? (b) Whose have absolute and comparative advantage? (c) Why they move toward trade? (d) Graphically shows the gain from trade.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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