Suppose Italy can make either 1000 statues or 700 bottles of wine. Suppose the US can make either 100 statues or 900 bottles of wine. How should each specialize? A. Italy should produce statues and the US should produce wine. B. The US should produce statues and Italy should produce wine. C. Italy should produce both statues and wine. ernational Academy of Science. All Rights Reserved.

Suppose Italy can make either 1000 statues or 700 bottles of wine. Suppose the US can make either 100 statues or 900 bottles of wine. How should each specialize? A. Italy should produce statues and the US should produce wine. B. The US should produce statues and Italy should produce wine. C. Italy should produce both statues and wine. ernational Academy of Science. All Rights Reserved.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 7PA

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Figure: Comparative Advantage II Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. Eastland Westland Oranges 100 90 80 70 60 50 40 30 20 10 Oranges 1 0 20 40 60 80 100120 140160180 200 Peaches A) peaches only. B) oranges only. 100 90 80 70 60 50 40 30 20 10 19. (Figure: Comparative Advantage II) Examine the figure Comparative Advantage II. Eastland has a comparative advantage in producing: C) both oranges and peaches. D) neither oranges nor peaches. 0 20 40 60 80 100 120 140 160 180 200 Peaches
Figure 2-8 Roses (dozens) 200 160 120 80 40 0 20 40 60 Orchids (dozens) Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. 80 roses Refer to Figure 2-8. Suppose Vidalia is currently producing 60 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized? 40 dozen roses 50 dozen roses 60 d 100 Lozen roses
3. Gains from trade Consider two neighboring island countries called Contente and Felicidad. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 6 12 Felicidad 4 16 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 6 million pairs of jeans and 36 million bushels of corn, and Felicidad produces 12 million pairs of jeans and 16 million bushels of corn. 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 jeans…
Production Possibility Curves For Idaho and lowa: Alfalfa and Corn Corn production in bushels per acre 360 320 280 lowa Farm's Production Possibilities Curve 240 200 160 120 80 Idaho Farm's Production 40 Possibilities Curve 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Alfalfa production in tons per acre has the absolute advantage in producing alfalfa and has the absolute advantage in producing corn. The state with the lower opportunity cost for producing a ton of alfalfa is so the state with the comparative advantage in producing alfalfa is a. lowa; Idaho; lowa; lowa O b. lowa; lowa; lowa; lowa O c. Idaho; lowa; Idaho; Idaho d. Idaho; Idaho; Idaho; Idaho
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3. Gains from trade Consider two neighboring island countries called Contente and Euphoria. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 16 Euphoria 20 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 8 million pairs of jeans and 48 million bushels of corn, and Euphoria produces 15 million pairs of jeans and 20 million bushels of corn. 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 jeans and corn…
25. The countries of Mistania and Boonton each produce two goods: TVs and Computers. The table below lists the production for each good, for each country per year when each country uses half of their resources to produce each good. Country Production of TVs Production of Computers Mistania 175 Boonton 168 What is the opportunity cost of producing 1 TVs in Miscania Computers What is the opportunity cost of producing 1 TVs in Boonton Computers Which country has a comparative advantage in producing TV? Miscania OBoonton ONot enough information Which country has a comparative advantage in producing Computers? Mistania Boonton. ONot enough information If both countries decide to specialize and trade with each other, what would be the outcome? OConsumers in Mistania will not be able to purchase Computers anymore OProducers of Computers in Boonton will be lowering production Consumers in Mistania and Boonton can enjoy more at lower prices Consumers in Boonton will be the ones benefiting from…
2. Gains from trade Consider two neighboring island countries called Felicidad and Bellissima. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The followlng 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) 20 Felicidad 16 Bellissima Initially, suppose Bellissima uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Felicidad uses 3 million hours of labor per month to produce rye and 1 millon hours per month to produce jeans. Consequently, Felicidad produces 15 million bushels of rye and 20 million pairs of jeans, and Bellissima 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…
30. If the Portuguese were to insist on consuming 90 bottles of wine, what does that imply for trade between these countries? There would be no trade. The Portuguese would be consuming beyond their production possibilities frontier. The English would benefit from producing their own wine. Both countries would benefit more. None of the above.
Comparative Advantage: Suppose that the United States and Switzerland produce bicycles and chocolate bars: Bicycles per worker/year Chocolate Bars per worker/year 10,000 20,000 Switzerland 1 United States 5 a. The United States has an absolute advantage in both bicycles and chocolate bars, but which country has a comparative advantage producing bicycles? Chocolate bars? b. Assume there are 10,000 workers. Draw the production possibilities frontier for the United States prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on the U.S. production possibilities frontier (put bicycles on the x-axis and millions of chocolate bars on the y-axis). c. Assume there are 10,000 workers. Draw the production possibilities frontier for Switzerland prior to trade. Assume the two countries agree to exchange 7,000 chocolate bars per bicycle. Illustrate the effect of specialization and trade on Switzerland's…
1. Use the following table to answer this question. The table contains the amount of wheat andshoes that could be produced by two nations (A and B) with a given amount of labor.Wheat ShoesNation A 100 100Nation B 400 800A. According to Adam Smith, which country should export wheat? Why? Which country shouldexport shoes? Why?B. According to David Ricardo, which country should export wheat? Why? Which countryshould export shoes? Why? 2. Economists today primarily exchange information through the per review process inpublishing and conference/workshop presentations. Briefly describe how the classicaleconomists (Smith, Malthus, Ricardo, and Mill) exchanged information with othereconomists. What were the advantages and disadvantages (compared to today) of theirmethods of exchanging information?