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Use the information in the following table on labor productivities in France and Germany to answer questions a through f. Output per hour worked Cheese Cars France 4 kilograms 0.5 Germany 2 kilograms 1 a. The absolute advantage in cheese is held by France and the absolute advantage in cars is held by Germany b. The relative price of cheese in France is 0.125 cars (round to three decimal places) and the relative price of cheese in Germany is 0.5 cars (round to one decimal place). c. The opportunity cost of cheese in France is 0.125 cars (round to three decimal places) and the opportunity cost of cheese in Germany is 0.5 cars (round to one decimal place). d. The comparative advantage in cheese is held by France and the comparative advantage in cars is held by Germany e. The trade price of cheese has an upper bound of 0.5 cars (round to one decimal place) and a lower bound of 0.125 cars (round to three decimal places). f. Assume France has 10 hours it can allocate toward the production of cheese and cars. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw France's PPC given the data above. (HINT: start your PPC on the vertical axis at 40.) Properly label your line. 2.) Using the point drawing tool, assume France produces according to its comparative advantage and identify its production point. Label this point A 3.) Using the line drawing tool, given the trade price of cars is five kilograms of cheese per car, draw the trade line showing how France can gain from trade. Properly label your line. Cheese 50- 45- 40+ 35- 30- 25- 20- 15- 10- 5- 0- France Cars 10 Q Q G

Use the information in the following table on labor productivities in France and Germany to answer questions a through f. Output per hour worked Cheese Cars France 4 kilograms 0.5 Germany 2 kilograms 1 a. The absolute advantage in cheese is held by France and the absolute advantage in cars is held by Germany b. The relative price of cheese in France is 0.125 cars (round to three decimal places) and the relative price of cheese in Germany is 0.5 cars (round to one decimal place). c. The opportunity cost of cheese in France is 0.125 cars (round to three decimal places) and the opportunity cost of cheese in Germany is 0.5 cars (round to one decimal place). d. The comparative advantage in cheese is held by France and the comparative advantage in cars is held by Germany e. The trade price of cheese has an upper bound of 0.5 cars (round to one decimal place) and a lower bound of 0.125 cars (round to three decimal places). f. Assume France has 10 hours it can allocate toward the production of cheese and cars. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw France's PPC given the data above. (HINT: start your PPC on the vertical axis at 40.) Properly label your line. 2.) Using the point drawing tool, assume France produces according to its comparative advantage and identify its production point. Label this point A 3.) Using the line drawing tool, given the trade price of cars is five kilograms of cheese per car, draw the trade line showing how France can gain from trade. Properly label your line. Cheese 50- 45- 40+ 35- 30- 25- 20- 15- 10- 5- 0- France Cars 10 Q Q G

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the information in the following table on labor productivities in France and Germany to answer questions a through f. Output per hour worked Cheese Cars France 4 kilograms 0.5 Germany 2 kilograms 1 a. The absolute advantage in cheese is held by France and the absolute advantage in cars is held by Germany b. The relative price of cheese in France is 0.125 cars (round to three decimal places) and the relative price of cheese in Germany is 0.5 cars (round to one decimal place). c. The opportunity cost of cheese in France is 0.125 cars (round to three decimal places) and the opportunity cost of cheese in Germany is 0.5 cars (round to one decimal place). d. The comparative advantage in cheese is held by France and the comparative advantage in cars is held by Germany e. The trade price of cheese has an upper bound of 0.5 cars (round to one decimal place) and a lower bound of 0.125 cars (round to three decimal places). f. Assume France has 10 hours it can allocate toward the production of cheese and cars. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw France's PPC given the data above. (HINT: start your PPC on the vertical axis at 40.) Properly label your line. 2.) Using the point drawing tool, assume France produces according to its comparative advantage and identify its production point. Label this point A. 3.) Using the line drawing tool, given the trade price of cars is five kilograms of cheese per car, draw the trade line showing how France can gain from trade. Properly label your line. Cheese 50 45- 40- 35- 30+ 25- 20- 15- 10- 5- 0- 0 France 4 Cars 6 8 S 10 Q
Transcribed Image Text:Use the information in the following table on labor productivities in France and Germany to answer questions a through f. Output per hour worked Cheese Cars France 4 kilograms 0.5 Germany 2 kilograms 1 a. The absolute advantage in cheese is held by France and the absolute advantage in cars is held by Germany b. The relative price of cheese in France is 0.125 cars (round to three decimal places) and the relative price of cheese in Germany is 0.5 cars (round to one decimal place). c. The opportunity cost of cheese in France is 0.125 cars (round to three decimal places) and the opportunity cost of cheese in Germany is 0.5 cars (round to one decimal place). d. The comparative advantage in cheese is held by France and the comparative advantage in cars is held by Germany e. The trade price of cheese has an upper bound of 0.5 cars (round to one decimal place) and a lower bound of 0.125 cars (round to three decimal places). f. Assume France has 10 hours it can allocate toward the production of cheese and cars. Carefully follow the steps below to draw the required objects on the figure to the right. 1.) Using the line drawing tool, draw France's PPC given the data above. (HINT: start your PPC on the vertical axis at 40.) Properly label your line. 2.) Using the point drawing tool, assume France produces according to its comparative advantage and identify its production point. Label this point A. 3.) Using the line drawing tool, given the trade price of cars is five kilograms of cheese per car, draw the trade line showing how France can gain from trade. Properly label your line. Cheese 50 45- 40- 35- 30+ 25- 20- 15- 10- 5- 0- 0 France 4 Cars 6 8 S 10 Q
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