Answered: Suppose there are only two industries…

Business

Economics

Suppose there are only two industries in an economy, producing two outputs (1 and 2). to produce one monetary

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per week that they can use to produce corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using 1 hour of labor. Country Corn Jeans (Bushels per hour of labor) (Pairs per hour of labor) Bellissima 8 16 Felicidad 5 20 Initially, suppose Bellissima uses 1 million hours of labor per week to produce corn and 3 million hours per week to produce jeans, while Felicidad uses 3 million hours of labor per week to produce corn and 1 million hours per week to produce jeans. Consequently, Bellissima produces 8 million bushels of corn and 48 million pairs of jeans, and Felicidad produces 15 million bushels of corn and 20 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…
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.
Suppose that there are two countries, the North and the South. Given the North's resources, it can produce 4 Cars in an hour or 1 unit of wheat in an hour. Given the South's resources, it can produce 1 car per hour or 4 units of wheat in an hour. Both countries have forty hours in total to produce wheat and cars. Finally, the goal of each country is to have the most possible cars and wheat, but also to always have an equal amount of each. In other words, 10 cars and 10 wheat is just as valuable as 11 cars and 10 units of wheat, or 10 cars and 11 units of wheat, but 11 cars and 11 wheat would make the country even better off. The question below relates to the PPF for the North and the South. While you do not need to turn in a graph of the PPF, they may be helpful to answer these questions. Finally, the first set of questions refers to a world where the North and South cannot trade, while the second set of questions refers to a world where they can trade. In the latter set of…
Martha and Dave like to make identical tacos and cakes. The time it takes Martha and Dave to make tacos and cakes is given in the table below. Martha Dave Time to make a taco 10 minutes 15 minutes Time to make a cake 20 minutes 30 minutes Which person has an absolute advantage in the production of tacos, and which person has an absolute advantage in the production of cakes? Group of answer choices Martha has an absolute advantage in producing both goods. Dave has an absolute advantage in producing both goods. Neither Dave nor Martha has an absolute advantage at producing either good. Both Martha and Dave have an absolute advantage in producing both goods. Martha has an absolute advantage in tacos; Dave has an absolute advantage in cakes.
Under a cap and trade system: a) the quantity of carbon emission is determined endogenously, while the price of emissions is set exogenously b) the price of carbon emissions is determined endogenously, while the quantity of emissions is set exogenously c) neither the quantity nor the price of emissions is determined endogenously d) both the quantity and price of emissions are determined exogenously e) both the quantity and price of emissions are determined endogenously
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Glacier and Rainier. Both countries produce corn and basil, each initially (i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of basil, as indicated by the grey stars marked with the letter A. BASIL (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF 6 Glacier A 12 18 24 30 36 CORN (Millions of pounds) 42 48 ? BASIL (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF I + 6 Rainier 12 18 24 30 36 CORN (Millions of pounds) I 42 48 (?) Glacier has a comparative advantage in the production of while Rainier has a comparative advantage in the production of Suppose that Glacier and Rainier specialize in the production…
how different economic systems and different social norms can create very different business and social incentives. Note that there are a lot of different things to consider here, but just as an example, just consider how an economic system characterized by respect for property would have a fundamentally different incentives for production and trade than one which automatically assumes that all resources are common property.
The U.S. and Canada both produce aircraft engines and tons of chemicals, which are sold for the same price in both countries. Suppose that with one unit of labor and one unit of capital, the U.S. can produce either 20 engines or 38 tons of chemicals and Canada can produce either 15 engines or 35 tons of chemicals. Which country has an absolute advantage producing chemicals?
Assume that two countries Alpha and Beta use a variety of inputs in their production Alpha exports excavating equipment and imports solar cells. Assume furthermore no economies of scale. Select the correct statement from the ones below: Even though there is trade, Alpha has a lower opportunity cost for excavating If the countries did not trade, Alpha would have a lower opportunity cost for excavating Neither country can consume at a point outside its production possibility frontier. Alpha avoids producing solar cells while B avoids producing no excavating
Suppose you have a team of two workers: one is a baker and one is a chef. Your baker is talented but is inexperienced. Your chef is not only an elite chef but is also faster at baking. If your kitchen specialized according to absolute advantage, who would do the cooking? Who would do the baking? If your kitchen specialized according to comparative advantage, who would do the cooking? Who would do the baking? Which approach above is more efficient? Explain your answer.
Explain how the theory of absolute advantage conflicts with the theory of mercantilism
When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce lemons and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. (? (?) Maldonia Lamponia 64 64 56 56 48 PPF 48 40 40 32 32 24 24 PPF 16 16 16 24 32 40 48 56 64 16 24 32 40 48 56 64 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of production of while Lamponia has a comparative advantage in the . Suppose that Maldonia and Lamponia specialize in the production of the goods in which each has a comparative advantage.…