Need help understanding parts H,I,J and K. Suppose Home has 200 units of labor. It can produce two goods, apples and bananas. InHome a worker can produce 3 apples or 4 bananas.a. Graph Home's PPF, with apples in the horizontal axis.b. What is the opportunity cost of apples?c. In the absence of trade - when Home is isolated - what would the relative price be?d. Now suppose there is another country, Foreign, with a labor force of 200. In Foreign aworker can produce 2 apples or 5 bananas.e. Graph Foreign's PPF, with apples in the horizontal axis.f. Construct the world relative supply curve, expressing the relative price of apples (PA/PB)in terms of the relative quantity of apples (QA/QB).g. Now suppose that world relative demand takes the following form:RD:QAQB=PBPAh. Graph the relative demand curve together with the relative supply curve.i. What is the equilibrium relative price of apples?j. Describe the pattern of trade (who exports what).k. Assume Home workers are less productive in both industries. What happens(conceptually) to the gains from trade for each country compared to before?

i. What is the equilibrium relative price of apples?From the graph, the equilibrium relative price…

Answered: Suppose Home has 200 units of labor. It…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter18: Trading With Other Nations

Section: Chapter Questions

Problem 8AA

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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 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?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
Can a nations comparative advantage change over time? What factors would make it change?
How does comparative advantage lead to gains from trade?
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?
You just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?

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