Question 5 [There are 100 workers in Pakistan, and each worker can produce either 10 shirts or 2 hats. There are 200 workers in Bangladesh, and each can produce either 4 shirts or 10 hats.] a. [Draw the Production Possibility Curves (PPC) for each country. What is the opportunity cost of shirts in Pakistan? What is the opportunity cost of shirts in Bangladesh? Which country has a comparative advantage in the production of shirts?] All sub-parts answered correctly b. [In the absence of trade, if Pakistan consumes 600 shirts, how many hats can it consume? In the absence of trade, if Bangladesh consumes 500 hats, how many shirts can it consume?] Both the sub-parts answered correctly. c. [Someone now proposes that Bangladesh and Pakistan enter into a trade agreement. Under this agreement, Bangladesh will give Pakistan 500 hats and Pakistan will give Bangladesh 200 shirts. If Pakistan continues to consume 600 shirts, how many hats will it be able to consume under this proposal? If Bangladesh continues to consume 500 hats, how many shirts will it be able to consume under this proposal? Should Pakistan accept this proposal? Should Bangladesh accept this proposal?] All sub-parts answered correctly

Question 5 [There are 100 workers in Pakistan, and each worker can produce either 10 shirts or 2 hats. There are 200 workers in Bangladesh, and each can produce either 4 shirts or 10 hats.] a. [Draw the Production Possibility Curves (PPC) for each country. What is the opportunity cost of shirts in Pakistan? What is the opportunity cost of shirts in Bangladesh? Which country has a comparative advantage in the production of shirts?] All sub-parts answered correctly b. [In the absence of trade, if Pakistan consumes 600 shirts, how many hats can it consume? In the absence of trade, if Bangladesh consumes 500 hats, how many shirts can it consume?] Both the sub-parts answered correctly. c. [Someone now proposes that Bangladesh and Pakistan enter into a trade agreement. Under this agreement, Bangladesh will give Pakistan 500 hats and Pakistan will give Bangladesh 200 shirts. If Pakistan continues to consume 600 shirts, how many hats will it be able to consume under this proposal? If Bangladesh continues to consume 500 hats, how many shirts will it be able to consume under this proposal? Should Pakistan accept this proposal? Should Bangladesh accept this proposal?] All sub-parts answered correctly

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question: • How would you explain the idea of comparative advantage to a family or friend who does not study business? • Describe a real-world example of a country/region having a comparative advantage in a good/service.
France Germany Cheese 2 kilograms 1 kilogram Cars 0.25 0.5 b. What is the relative price of cheese in France if it does not trade? In Germany? c. What is the opportunity cost of cheese in France? In Germany? d. Which country has a comparative advantage in cheese? In cars? Explain your answer. e. What are the upper and lower bounds for the trade price of cheese? f. Draw a hypothetical PPC for France and label its slope. Suppose that France follows its comparative advantage in deciding where to produce on its PPC. Label its production point. If the trade price of cars is 5 kilograms of cheese per car, draw a trade line (CPC) showing how France can gain from trade.type solution pls
Suppose that Italy and Spain both produce cheese and wine. Italy's opportunity cost of producing a bottle of wine is 3 pounds of cheese. That is, Italy forgoes the production of 3 pounds of cheese when it produces a bottle of wine. Spain's opportunity cost of producing a bottle of wine is 4 pounds of cheese. _________ (options: Neither Italy nor Spain has, Italy has, Both Italy and Spain have, Spain has) a comparative advantage in the production of wine. _________ (options: Neither Italy nor Spain has, Italy has, Both Italy and Spain have, Spain has) a comparative advantage in the production of cheese.
19) According to the Heckscher-Ohlin model, the source of comparative advantage is a country's A) factor endowments. B) technology. C) advertising. D) human capital. E) political system. Answer:
Question 1: Germany and India only produce two goods. They have the same fixed resources, are equally efficient, and both countries have constant opportunity costs between the two goods. In one month, Germany can produce 200,000 automobiles or 60,000 hand-held computers. India can produce 150,000 automobiles or 50,000 hand-held computers. A. Graph the given information. B. What is the opportunity cost for Germany to produce automobiles? C. What is the opportunity cost for India to produce automobiles? D. What is the opportunity cost for Germany to produce hand-held computers? E. What is the opportunity cost for India to produce band-held computers? F. Which nation has the absolute advantage in automobiles, which has the absolute advantage in hand-held computers? G. Which nation has the comparative advantage in automobiles, which has the comparative advantage in hand-held computers? H. Can these nations benefit from trade? Explain how. Be detailed, use numbers and prove your answer.
Food (Comparative Advantage) The consumption possibilities frontiers shown by the blue lines in the following exhibit assume terms of trade of 1 unit of clothing for 1 unit of food. What would the consumption possibilities frontiers look like if the terms of trade were 1 unit of clothing for 2 units of food? Production (and Consumption) Possibility Frontiers with Trade (Millions of Units Per Day) (a) United States (b) Izodia 600 500- 400 600 500 U 400 300 200 U 100 Food 300 200 100 13 0 100 200 300 400 Clothing 0 100 200 300 400 Clothing
Suppose a capital abundant country, such as Canada, enters into free trade with a natural resource rich country, such as India.I. Explain the form of trade, such as, who exports what and imports what, using the concept of comparative advantage in trade theory. Identify each country’s comparative advantage and disadvantage.II. Explain how trade creates winners and losers within each country?Note: You may/may not draw relevant diagrams to answer the above questions.
To the right are hypothetical production possibilities tables for New Zealand and Spain. Each country can produce apples and plums. Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following:a. What is each country’s cost ratio of producing plums and apples.b. Which nation should specialize in which product? c. Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples. (Plot these lines on your graph.) d. Suppose the optimum product mixes before specialization and trade were alternative B in New Zealand and alternative S in Spain. What would be the gains from specialization and trade?
1. Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. a) Which country has the comparative advantage in food? In fuel? Explain. b) Which good(s) should each country specialize in? c) Discuss the benefits of specialization for each country.
Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. Graph Foreign’s PPF. Construct the world relative supply curve of banana. What will happen if ? Graph the relative demand curve along with the relative supply curve of banana. Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples What is the equilibrium relative price of banana?
For the closed economy: -Draw the production possibilities curves for Italy and Spain by explaining them separately. - in Spain in the case of a closed economy and The price of white scarves (in terms of red scarves) in Italy what? - Which country is absolute in the production of which color scarf has the upper hand? Explain in detail. - Which country should be compared in the production of which color scarf? has the upper hand? Explain in detail. - When countries open up, what color scarf each is exported? will?
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