ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 19, Problem 1.3P
To determine
The consumption possibilities frontiers in case the terms of trade are altered.
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Students have asked these similar questions
10. Given the above set of production possibilities and consumption (trade) possibilities frontiers, what happens to the prices of wine and cloth in each country as a result of trade?
a) The price of wine in Portugal decreases from ⅓ yard/bottle to ½ yard/bottle.
b) The price of cloth in Portugal increases from 3 bottles/yard to 2 bottles/yard.
c) The price of wine in England decreases from 1 yard/bottle to ½ yard/bottle.
d) The price of cloth in England increases from 1 bottle/yard to 3 bottles/yard.
e) All of the above
10)
PPFS for Countries X and Y
300
Y
200
400
tons of rice
a). In the graph above, what is the opportunity cost of producing a ton of wheat for each
country?
b) In the graph above, which country has a comparative advantage in producing wheat?
c) In the graph above, if both countries specialize in producing the good in which they
have a comparative advantage, together how much will they produce of each good?
Countries X and Y will produce 200 tons
rice for 100 tons of wheat
tons of wheat
Short Answer (8.0score)
33. The chart below is the prodution cost of US.
and UK.
U.S.
U.K.
Wheat (bushels/labor hour)
6
1
Cloth (yards/labor hour)
4
2
question: (1) explain the comparative advantage
of each nation;
(2) what is the gain from trade if the
two trade for 4 wheat for 4 cloth?
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- The figure shows the markets for shoes if there is no trade between the United States and Brazil. Which country has a comparative advantage in producing shoes? With international trade, explain which country would export shoes and how the price of shoes in the importing country and the quantity produced by the importing country would change. Explain which country gains from this trade.arrow_forwardAa35 Economicsarrow_forward(Figure: The Production Possibility Frontiers for Kansas and Wisconsin) Use Figure: The Production Possibility Frontiers for Kansas and Wisconsin. In autarky, Kansas produces and consumes 30 gallons of milk and 80 bushels of corn, while Wisconsin produces and consumes 80 gallons of milk and 60 bushels of corn. If the two states engage in trade, with each state specializing in the good in which it has a comparative advantage, world production of milk will: Kansas Wisconsin Corn (bushels) Corn (bushels) 225 225 2004 200 175 175 150 150 125 125 100 100 75 75 50 50 25 1 0 25 50 75 100 125 150 175 200 25 50 75 100 125 150 175 200 Milk (gallons) Milk (gallons) OO decrease by 30 gallons. increase by 90 gallons. increase by 120 gallons. remain constant. ॐ ४ 25 0arrow_forward
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- Context: In the absence of trade, assume Andy and Jack divide their time equally between the two activities. Then, Andy and Jack decide to trade with each other and specialize in the product in which they have a comparative advantage. You only need to explain with words how trade makes each person better off. Include graphs/tables/calculations in the explanation. Present answers with 4 decimals if needed. Note that Shoes & Gloves is in the x-axis, and Andy & Jack is in the y-axis. Production/hr Shoes Gloves Andy 96 62 Jack 74 38arrow_forward4. Specialization and trade 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 Candonia and Desonia. Both countries produce lemons and tea, each initially (i.e., before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of tea, as indicated by the grey stars marked with the letter A. Candonia Desonia 48 48 42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 A 6 6 12 18 24 30 36 42 48 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Candonia has a comparative advantage in the production of , while Desonia has a comparative advantage in the production of . Suppose that Candonia and Desonia specialize in the production of the goods in which each has a…arrow_forwardI am struggling to understand this topic so I would like some help with question #2 and questions #4, 5, 6 and 7arrow_forward
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