Suppose that Croatia and Wales both produce beets and wheat. Croatia's opportunity cost of producing a bushel of wheat is 4 bushels of beets while Wales's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of beets. has a comparative advantage in the Suppose that Croatia and Wales consider trading wheat and beets with each other. Croatia can gain from specialization and trade as long as it receives more than of beets for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives more of wheat for each bushel of beets it exports to Croatia. than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Wales and Croatia to gain from trade? Check all that apply. 6 bushels of beets per bushel of wheat 1 bushel of beets per bushel of wheat 16 bushels of beets per bushel of wheat 8 bushels of beets per bushel of wheat

Suppose that Croatia and Wales both produce beets and wheat. Croatia's opportunity cost of producing a bushel of wheat is 4 bushels of beets while Wales's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of beets. has a comparative advantage in the Suppose that Croatia and Wales consider trading wheat and beets with each other. Croatia can gain from specialization and trade as long as it receives more than of beets for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives more of wheat for each bushel of beets it exports to Croatia. than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Wales and Croatia to gain from trade? Check all that apply. 6 bushels of beets per bushel of wheat 1 bushel of beets per bushel of wheat 16 bushels of beets per bushel of wheat 8 bushels of beets per bushel of wheat

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose each worker in Home can produce 12 wheat or 4 TVs. Assume that Home has 10 workers. Suppose each worker in Foreign can produce 8 wheat or 2 TVs. Assume that Foreign has 20 workers. a. What is the no-trade relative price of TVs in Home and Foreign respectively?b. Which country has an absolute advantage in the production of wheat? Whichcountry has a comparative advantage in the production of wheat?c. Use two graphs (one for Home and one for Foreign) to display productionpossibilities along with indifference curves and label no-trade equilibria and a trade equilibrium constructed by you. (Assume that positive quantities of both goods are consumed in both countries in all equilibria). Pick your own numbers for the relative price in the trade equilibrium and for quantities consumed in the trade and no-trade equilibria for both countries.d. What is the real wage in units of wheat in Home in the no-trade and in your proposed trade equilibrium?e. Calculate the gains from trade for Home…
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Suppose that Slovenia and Wales both produce olive oil and broccoli. Slovenia's opportunity cost of producing a bushel of broccoli is 4 crates of olive oil while Wales's opportunity cost of producing a bushel of broccoli is 12 crates of olive oil. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of olive oil. has a comparative advantage in the Suppose that Slovenia and Wales consider trading broccoli and olive oil with each other. Slovenia can gain from specialization and trade as long as it receives more than of olive oil for each bushel of broccoli it exports to Wales. Similarly, Wales can gain from trade as long as it of broccoli for each crate of olive oil it exports to Slovenia. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of olive oil) would allow both Wales and Slovenia…
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