Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 10, Problem 2IP
(a)
To determine
Three assumptions of the law of one price.
(b)
To determine
Wages of labor and the law of one price.
(c)
To determine
Capital and the law of one price.
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From the trade model, we found that in most cases, trade creates value. Where do we see that conclusion in the Supply and Demand model? You should be able to answer this in a few sentences.
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.
Let suppose in the world there is two-country, Country X and Country Y. In country X there is only one worker A while in 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 Beach work 40 hours a week and can devote this time to growing sugar, raising wheat, or a combination of the both. 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 an absolute and comparative advantage?
(c) Why they move toward trade?
(d) Graphically shows the gain from trade.
Chapter 10 Solutions
Microeconomics
Ch. 10.1 - Prob. 1QCh. 10.1 - Prob. 2QCh. 10.1 - Prob. 3QCh. 10.1 - Prob. 4QCh. 10.1 - Prob. 5QCh. 10.1 - Prob. 6QCh. 10.1 - Prob. 7QCh. 10.1 - Prob. 8QCh. 10.1 - Prob. 9QCh. 10.1 - Prob. 10Q
Ch. 10 - Prob. 1QECh. 10 - Prob. 2QECh. 10 - Prob. 3QECh. 10 - Prob. 4QECh. 10 - Prob. 5QECh. 10 - Prob. 6QECh. 10 - Prob. 7QECh. 10 - Prob. 8QECh. 10 - Prob. 9QECh. 10 - Prob. 10QECh. 10 - Prob. 11QECh. 10 - Prob. 12QECh. 10 - Prob. 13QECh. 10 - Prob. 1QAPCh. 10 - Prob. 2QAPCh. 10 - Prob. 3QAPCh. 10 - Prob. 4QAPCh. 10 - Prob. 5QAPCh. 10 - Prob. 1IPCh. 10 - Prob. 2IPCh. 10 - Prob. 3IPCh. 10 - Prob. 4IPCh. 10 - Prob. 5IPCh. 10 - Prob. 6IPCh. 10 - Prob. 7IPCh. 10 - Prob. 8IP
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