EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 1, Problem 4SP
To determine
Check whether the countries are better off or worse off by trade with example.
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Students have asked these similar questions
Suppose that Country A and Country B can produce the following numbers of Chairs
and Printers per worker per day. Which of the following is true?
Country A Country B
25
Chairs
10
Printers
4
Country B has Absolute Advantage (in both products), and Country A has
Comparative Advantage in Printers.
Country A has Absolute Advantage (in both products), and Country B has
Comparative Advantage in Printers.
Country A has Absolute Advantage (in both products), and Country A has
Comparative Advantage in Printers.
Country B has Absolute Advantage (in both products), and Country B has
Comparative Advantage in Printers.
Suppose that a tailor in Cottonland can sew either 40 cotton shirts or 10 silk shirts per week, and a tailor in Silkland can sew either 18 cotton shirts or 6 silk shirts per week. There are 20 tailors in Cottonland and 20 tailors is Silkland. Answer the following questions:
2.1. What country has the absolute advantage in sewing cotton shirts? What country has the absolute advantage in sewing silk shirts?
2.2. What country has the comparative advantage in sewing cotton shirts? What country has the comparative advantage in sewing silk shirts? Numerically
2.3. If the two countries specialize and produce according to the comparative advantage criterion, how much in terms of cotton and silk shirts each country will produce per week? Fill in the table below with your calculations.
Cotton shirts/per week
Silk shirts/per week
Cottonland
Silkland
When countries specialize based on their comparative advantage and trade with each other, how does it lead to gains from trade for both countries (even if one country has an absolute advantage in both goods)?
Chapter 1 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
Knowledge Booster
Similar questions
- A) Which producer has the comparative advantage in producing puzzles? Geppetto or Lewis B) Which producer has the comparative advantage in producing puppets? C) If both producers decided to trade with each other to stock their toy stores, which of the following is a range of terms of trade that would benefit both Geppetto and Lewis (1 puppet = x puzzles)? Please explain to me how to solve those questions. Don't just give me the answers. Thank you so much!arrow_forwardI've already read the answer provided on this site, but it is not giving me the information I need. I understand the math for finding the opportunity costs for each item in each country. However, where are they getting the answer that 2.5 tons of chemicals is what the US will give up, and 1 ton of apparel is what China will give up? From videos I've seen on youtube, they basically state that as long as the cost is less than what the original opportunity cost is, then nations will trade. So, it costs China 4 apparel for every 1 ton of chemicals, and in the US it costs 1 apparel for every 3 tons of chemicals. Am I right to assume that as long as China can trade less than 4 apparel it will benefit, and as long as the US can trade less than 3 tons of chemicals it will benefit? If so, then what is the math being used to arrive at exactly 1 ton of Chemicals for 1 ton of Apparel for China, and 1 apparel for 2.5 tons of Chemicals for the US? I need to understand the math that is used to…arrow_forwardThe table below shows the maximum quantities of two goods that each country can produce. If the countries follow the principle of comparative advantage, which of the following is a potential benefit of trade? Vibranium (tons) Gold (tons) Wakanda 8 tons 2 tons Zamunda 2 tons 1 ton Group of answer choices Trade can allow each country to increase consumption beyond its production possibilities frontier. Trade can allow each country to shift its production possibilities frontier outward to higher levels of production. Trade can allow each country to become less vulnerable to the actions of the other country. All of these answers are correct.arrow_forward
- Jefferson Franklin 1 wheat 1/2 cotton The table above shows the number of hours required to produce one bushel of cotton and one bushel of wheat for Jefferson and Franklin. If each person specializes according to his comparative advantage(s), a mutually beneficial price ratio would be = 1 wheat= 2/3 cotton 1 wheat = 0.4 cotton Cotton (per bushel) 10 hours 12 hours 1 wheat 1/3 cotton = Wheat (per bushel) 5 hours 4 hours raarrow_forwardThe figure below depicts the production possibilities curve (PPC) of a country. It also depicts the consumption possibilities curve (CPC) when the country is engaged in trade with one other country. Point C is this country's consumption when that trade occurs. Quantity of 350 good y 300 250 200 150 100 50 0 0 20 40 19 C 60 80 100 120 Quantity of good x Calculate how much this country trades with the other country in good y when the two countries engage in free trade. Enter a whole number only. Enter a positive number if this country exports good y, and a negative number if it imports it. Enter O if the answer cannot be obtained with the information given. Since this is a graphical question, approximate answers (within 20 of the exact answer) are accepted. Hint: consider how much the country produces and consumes this good.arrow_forwardWhen can two countries gain from trading two goods? when the first country can only produce the first good and the second country can only produce the second good when the first country can produce both goods, but can only produce the second good at great cost, and the second country can produce both goods, but can only produce the first good at great cost when the first country is better at producing both goods and the second country is worse at producing both goods Two countries could gain from trading two goods under all of the above conditions.arrow_forward
- Suppose that France and Germany both produce wine and cheese. The table below shows combinations of the goods that each country can produce in a day. Part 2 France Germany Wine (Bottles) Cheese (Pounds) Wine (Bottles) Cheese (Pounds) 0 8 0 25 1 6 1 20 2 4 2 15 3 2 3 10 4 0 4 5 5 0 Part 3 Who has the comparative advantage in producing wine and who has the comparative advantage in producing cheese? Part 4 A. Neither has a comparative advantage producing wine or cheese. B. France has a comparative advantage producing wine and Germany has a comparative advantage producing cheese. C. France has a comparative advantage producing cheese and Germany has a comparative advantage producing wine. D. France has a comparative advantage producing wine and cheese. E. Germany has a comparative advantage producing wine and cheese. Part 5 Suppose that France is…arrow_forwardThe table from the image provided shows the ability of two countries to produce TVs and chairs in a given time period. What can be concluded from the information?  (Pick either a,b,c, or d) a) Country X has an absolute advantage in TVs and country Y has an absolute advantage in chairs b) Country X has a comparative advantage in TVs and country Y has an absolute advantage in chairs c) Country X has a comparative advantage in chairs and country Y has an absolute advantage in TVs d) Country X has an absolute advantage in TVs and country Y has a comparative advantage in chairsarrow_forwardTwo countries (Home and Foreign) use labor to produce two goods: Cloth and Wheat. The number of units of the good that can be produced by one unit of labor are given below. The number of units of labor in the Home And Foreign countries are 10 and 30, respectively. a) Calculate the opportunity costs of Cloth in the two countries, briefly describing your calculation. What are the goods in which the countries have comparative advantage? b) Use appropriate examples for world price and indifference curves to show that both Home and Foreign benefit from trade. Mention the world price, and the point where production and consumption occur in the two countries after trade. Wheat Cloth Home 12 3 Foreign 4 2arrow_forward
- People in the U.S. state of Iowa eat both corn and potatoes. It is technically possible for farmers to grow both corn and potatoes in Iowa, yet almost no farmers grow potatoes. Instead, every year, Iowa exports corn and imports potatoes from the U.S. state of Idaho, where farmers specialize in potatoes. Which of the following principles of economic interaction best describes this scenario? Trade can make everyone better off. All costs are opportunity costs. When markets do not achieve efficiency, government intervention can improve overall welfare. There is a tradeoff between equality and efficiency.arrow_forwardSuppose that an hour of work in Brazil can produce 1 pound of coffee or 4 pounds of sugar. In Colombia, an hour of work produces 2 pounds of coffee or 5 pounds of sugar. Which country has the absolute advantage in coffee? In sugar? Calculate the opportunity cost of each good in each country. Which country has the comparative advantage in each good? Why? What would be a mutually beneficial terms of trade?arrow_forwardTwo countries produce two goods and they each have 3 million hours of labor. Consider the table that shows the quantity produced per labor hour: Shirts Corn (bushels) Alpha 4 12 Beta 2 10 If each country specializes in the good for which it has a comparative advantage then in total the two countries can together produce million shirts and million bushels of corn. Enter whole numbers.arrow_forward
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