Use the following assumptions to solve this assignment: 1. There are three countries- Argentina, Britain and Canada. 2. Each country produces and consumes two kinds of goods - crude oil and beef. 3. All countries make their goods from a single type of input– labor- and each country has 60 hours of labor available to produce crude oil and beef. 4. Each country demands 2 barrels of crude oil. This assumption simply means that a country must have exactly 2 barrels of crude oil – it may produce them domestically, it may import them from abroad, or it makes some domestically and imports the rest. 5. Countries produce goods using the technology described in the table below: Technology Hours of labor needed to produce one unit of good Argentina Britain Canada barrel of crude oil pound of beef 20 30 12 10 Using the above assumptions, answer the following questions: 1. Calculate the quantities of crude oil and beef produced in each country in autarky (when they do not trade and each country produces its own crude oil and beef) Quantities produced Argentina Britain Canada Total Autarky (No trade) pound of beef 2. Order the countries according to their absolute advantage in production of crude oil 3. Order the countries according to their absolute advantage in production of beef 4. Consider the case where countries are free to specialize and trade. In the table below calculate each country's opportunity cost of producing one unit of each good. barrel of crude oil Argentina 20 Britain Canada barrel of crude oil pound of beef OC of 1 barrel of oil OC of 1 pond of beef 5. Calculate the quantities of crude oil and beef produced in each country, consistent with the country's comparative advantage. 30 12 10
Use the following assumptions to solve this assignment: 1. There are three countries- Argentina, Britain and Canada. 2. Each country produces and consumes two kinds of goods - crude oil and beef. 3. All countries make their goods from a single type of input– labor- and each country has 60 hours of labor available to produce crude oil and beef. 4. Each country demands 2 barrels of crude oil. This assumption simply means that a country must have exactly 2 barrels of crude oil – it may produce them domestically, it may import them from abroad, or it makes some domestically and imports the rest. 5. Countries produce goods using the technology described in the table below: Technology Hours of labor needed to produce one unit of good Argentina Britain Canada barrel of crude oil pound of beef 20 30 12 10 Using the above assumptions, answer the following questions: 1. Calculate the quantities of crude oil and beef produced in each country in autarky (when they do not trade and each country produces its own crude oil and beef) Quantities produced Argentina Britain Canada Total Autarky (No trade) pound of beef 2. Order the countries according to their absolute advantage in production of crude oil 3. Order the countries according to their absolute advantage in production of beef 4. Consider the case where countries are free to specialize and trade. In the table below calculate each country's opportunity cost of producing one unit of each good. barrel of crude oil Argentina 20 Britain Canada barrel of crude oil pound of beef OC of 1 barrel of oil OC of 1 pond of beef 5. Calculate the quantities of crude oil and beef produced in each country, consistent with the country's comparative advantage. 30 12 10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer for this question for option 4 to 7. All the necessary information is given in the images below.
Transcribed Image Text:Fit to width
HW#1: Ricardian Theory of Trade - Assignment
Use the following assumptions to solve this assignment:
1. There are three countries - Argentina, Britain and Canada.
2. Each country produces and consumes two kinds of goods – crude oil and beef.
3. All countries make their goods from a single type of input – labor- and each
country has 60 hours of labor available to produce crude oil and beef.
4. Each country demands 2 barrels of crude oil. This assumption simply means that a
country must have exactly 2 barrels of crude oil – it may produce them
domestically, it may import them from abroad, or it makes some domestically and
imports the rest.
5. Countries produce goods using the technology described in the table below:
Technology
Hours of labor needed to produce one unit of good
Argentina
Britain
Canada
barrel of crude oil
pound of beef
20
30
12
2
10
Using the above assumptions, answer the following questions:
1. Calculate the quantities of crude oil and beef produced in each country in autarky
(when they do not trade and each country produces its own crude oil and beef)
Quantities produced Argentina
Britain
Canada
Total
Autarky barrel of crude oil
(No trade) pound of beef
2. Order the countries according to their absolute advantage in production of crude
oil
3. Order the countries according to their absolute advantage in production of beef
4. Consider the case where countries are free to specialize and trade. In the table
below calculate each country's opportunity cost of producing one unit of each
good.
Argentina
20
Britain
Canada
barrel of crude oil
30
12
pound of beef
OC of 1 barrel of oil
OC of 1 pond of beef
5. Calculate the quantities of crude oil and beef produced in each country, consistent
with the country's comparative advantage.
2
10
Transcribed Image Text:Quantities produced Argentina
barrel of crude oil
pound of beef
Britain
Canada
Total
Trade
6. Graph each country's own PPF. For consistency, plot crude oil on the horizontal
axis.
7. Graph the PPF for all three countries combined.
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