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Suppose there are only two industries in an economy, producing two outputs (1 and 2). to produce one monetary
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- Describe any four economic systems that you know of in your economySuppose two countries, France and Germany, use only capital and labor for production. Factor endowments of the nations are presented in the table below. Capital | Labor France 2200 800 Germany 880 220 a. Which country is labor-abundant? Which country is capital-abundant? b. Assume that both countries produce two goods, cars and wine. If cars are capital-intensive and wines are labor-intensive, which country should specialize in the production of cars? Which country should specialize in the production of wines? Explain why?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…
- A country's production possibilities frontier will be a straight line if Group of answer choices the economy is producing efficiently. increasing the production of one good by x units entails no opportunity cost in terms of the other good. increasing the production of one good by x units entails a constant opportunity cost in terms of the other good. the economy is engaged in trade with at least one other economy.So, let's look at the last combination. What is the opportunity cost of one cake if we move from combination D to combination E? (If needed, round to one decimal place.)Diego and Kris are roommates. They spend most of their time studying, but they leave some time for their favorite activities: making pizza and brewing root beer. Diego takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Kris takes 6 hours to brew a gallon of root beer and 4hours to make a pizza. a) What is each roommate's opportunity cost of making a pizza? Who has the absolute advantage in making pizza? Who has the comparative advantage in making pizza? b) If Diego and Kris trade foods with each other, who will trade away pizza in exchange for root beer? c) The price of pizza can be expressed in terms of gallons of root beer, what is the highest price at which pizza can be traded that would make both roommates better off? What is the lowest price? Why?
- Suppose the fictional country of Olympia produces only two goods: rice and electric scooters. The following graph plots Olympia's current production possibilities frontier, and includes six different output combinations given by black points (plus symbols) labeled A to F. ELECTRIC SCOOTERS (Millions) 20 40 100 80 60 PPF 201 40 E + 60 B × 4 F 80 100 RICE (Millions of bushels) ?Susan can pick 4 pounds of coffee in an hour or gather 2 pounds of nuts. Tom can pick 2 pounds of coffee in an hour or gather 4 pounds of nuts. Each works 6 hours per day. a. What is the maximum number of pounds of coffee the two can pick in a day? pounds. b. What is the maximum number of pounds of nuts the two can gather in a day? c. Suppose Susan and Tom were picking the maximum number of pounds of coffee when they decided that they would like to begin gathering 4 pounds of nuts per day. Who would gather the nuts? (Click to select) +. How many pounds of coffee would they still be able to pick? pounds of coffee per day. d. Now suppose Susan and Tom were gathering the maximum number of pounds of nuts when they decided that they would like to begin picking 8 pounds of coffee per day. Who would pick the coffee? (Click to select)). How many pounds of nuts would they still be able to gather? pounds of nuts per day. e. Would it be possible for Susan and Tom in total to gather 26 pounds of…Suppose the United States produces only two goods: alfalfa and computers. The following graph shows the United States’s current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, attainable, or unattainable. Check all that apply. (refer to screenshot for table and graph)
- Production possibilities for two producers and merchants, Eric and Stan, are shown in the table below. Suppose both Eric and Stan are initially independent producers. Eric is producing 160 loaves of bread and 20 logs of wood. Stan is producing 120 logs of wood and 30 loaves of bread. Eric's Production Possibilities (monthly) Bread (loaves) Wood (logs) Stan's Production Possibilities (monthly) Bread (loaves) Wood (logs) 200 0 150 0 160 20 120 30 120 40 90 60 80 60 60 90 40 0 80 100 30 0 120 150 Eric and Stan are considering an arrangement of specialization and trade. If they specialize according to comparative advantage and agree on a trade of 30 loaves of bread for 20 logs of wood, then OA. Eric will have the same number of loaves of bread, but he will have more logs of wood. OB. Stan will have the same number of logs of wood, but he will have more loaves of bread. OC. Stan will produce 150 logs of wood, keep 130, and trade 20 to Eric in exchange for 30 loaves of bread. OD. Eric will…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…Alice and Bob each produce haircuts and landscaping services. Alice can provide 4 haircuts in one hour. Bob can provide 2 haircuts in one hour. It takes Alice 2 hours to landscape an acre of property. It takes Bob 1 hour to landscape an acre of property. Assume Alice and Bob both work a standard 8 hour day. If Alice and Bob were to combine forces and open their business "Heads and Hedges" together, how should Alice and Bob allocate their time to maximize the gains from trade with one another? (check all that apply) Alice should only spend her time cutting hair. Bob should only spend his time cutting hair. Bob should only spend his time landscaping. Alice should only spend her time landscaping.