Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 33, Problem 19CTQ
Look at Exercise 33.2. Compute the
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B1) Country A has 10 million workers and Country B has 20
million workers. Each worker in Country A can produce 2 units of
wine and 4 units of fabric in a year. Each worker in Country B
can produce 3 units of wine and 5 units of fabric in a year.
a) What is Country A's opportunity cost of producing wine (in
terms of fabric given up)? What is Country A's opportunity cost
of producing fabric (in terms of wine given up)?
b) What is the maximum production of wine in country A in a
year? What is the maximum production of wine in country B in a
year?
c)Which country has a comparative advantage in producing
fabric? Explain your answer in no more than two sentences.
Which country has absolute advantage in producing fabric?
Explain your answer in no more than two sentences.
d) Which country should import wine? Explain your answer.
What is the range of trading prices (in terms of fabric) for wine
between the two countries?
1. Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000.
a) Which country has the comparative advantage in food? In fuel? Explain.
b) Which good(s) should each country specialize in?
c) Discuss the benefits of specialization for each country.
There are 100 workers in Pakistan, and each worker can produce either 10 shirts or 2 hats. There are 200 workers in the Bangladesh, and each can produce 4 shirts or 10 hats.]
1. Draw the Production Possibility Curves (PPC) for each country. What is the opportunity cost of shirts in Pakistan? What is the opportunity cost of shirts in Bangladesh? Which country has a comparative advantage in the production of shirts?
2. In the absence of trade, if Pakistan consumes 600 shirts, how many hats can it consume? In the absence of trade, if Bangladesh consumes 500 hats, how many shirts can it consume?
3. Someone now proposes that Bangladesh and Pakistan enter into a trade agreement. Under this agreement, the Bangladesh will give Pakistan 500 hats and Pakistan will give Bangladesh 200 shirts. If Pakistan continues to consume 600 shirts, how many hats will it be able to consume under this proposal? If Bangladesh continues to consume 500 hats, how many shirts will it be able to consume under this…
Chapter 33 Solutions
Principles of Economics 2e
Ch. 33 - True or False: The source of comparative advantage...Ch. 33 - Brazil can produce 100 pounds of beef or 10 autos....Ch. 33 - In France it takes one worker to produce one...Ch. 33 - In Germany it takes three workers to make one...Ch. 33 - How can there be any economic gains for a country...Ch. 33 - Table 33.15 shows how the average costs of...Ch. 33 - If the removal of trade banters is so beneficial...Ch. 33 - What is absolute advantage? What is comparative...Ch. 33 - Under what conditions does comparative advantage...Ch. 33 - What factors does Paul Krugman identity that...
Ch. 33 - Is it possible to have a comparative advantage in...Ch. 33 - How does comparative advantage lead to gains from...Ch. 33 - What is intra-industry trade?Ch. 33 - What are the two main sources of economic gains...Ch. 33 - What is splitting up the value chain?Ch. 33 - Are the gains from international trade more likely...Ch. 33 - Are differences in geography behind the...Ch. 33 - Why does the United States not have an absolute...Ch. 33 - Look at Exercise 33.2. Compute the opportunity...Ch. 33 - You just overheard your friend say the following:...Ch. 33 - Look at Table 33.9. Is there a range of trades for...Ch. 33 - You just got a job in Washington, D.C. You move...Ch. 33 - Does intra-industry trade contradict the theory of...Ch. 33 - Do consumers benefit from intra-industry trade?Ch. 33 - Why might intra-industry trade seem surprising...Ch. 33 - In World Trade Organization meetings, what do you...Ch. 33 - Why might a low-income country put up barriers to...Ch. 33 - Can a nations comparative advantage change over...Ch. 33 - France and Tunisia both have Mediterranean...Ch. 33 - In Japan, one worker can make 5 tons of rubber or...Ch. 33 - Review the numbers for Canada and Venezuela from...Ch. 33 - In Exercise 33.31, is there an ask where...Ch. 33 - From earlier chapters you will recall that...Ch. 33 - Consider two countries: South Korea and Taiwan....Ch. 33 - If trade increases world GDP by 1 per year, what...
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