EBK ECONOMICS
20th Edition
ISBN: 9780077660710
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 38, Problem 7RQ
To determine
The reason for the lack of complete specialization.
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Students have asked these similar questions
3. The following hypothetical production
possibilities tables are for China and the
United States. Assume that before
specialization and trade, the optimal
product mix for China is alternative B
and for the United States is alternative
U. LO20.2
a. Are comparative-cost conditions such
that
the
two
countries
should
specialize? If so, what product should
each produce?
b. What is the total gain in apparel and
chemical output that would result
from such specialization?
c. What are the limits of the terms of
trade? Suppose that the actual terms
of trade are 1 unit of apparel for 1 unit
of chemicals and 4 units of apparel for
6 units of chemicals. What are the
gains from specialization and trade for
each nation?
China Production Possibilities
Product
A
D
F
Apparel (in thousands)
30
24
18
12
Chemicals (in tons)
12
18
24
30
U.S. Production Possibilities
Product
R
T.
V
Apparel (in thousands)
hemicals (in tons)
10
8.
4
4
8.
12
16
20
p. 579
5. Suppose that the comparative-cost ratios of two products-
baby formula and tuna fish-are as follows in the hypotheti-
cal nations of Canswicki and Tunata:
Canswicki: 1 can baby formula = 2 cans tuna fish
1 can baby formula = 4 cans tuna fish
Tunata:
In what product should each nation specialize? Explain why
terms of trade of 1 can baby formula =
would be acceptable to both nations.
25 cans tuna fish
In Country A, the production of 1 bicycle requires using resources that could otherwise be used to produce 11 lamps. In Country B, the production of 1 bicycle requires using resources that could otherwise be used to produce 15 lamps. Which country has a comparative advantage in making bicycles? LO26.2 a. Country A. b. Country B
Chapter 38 Solutions
EBK ECONOMICS
Ch. 38.2 - Prob. 1QQCh. 38.2 - Prob. 2QQCh. 38.2 - Prob. 3QQCh. 38.2 - Prob. 4QQCh. 38 - Prob. 1DQCh. 38 - Prob. 2DQCh. 38 - Prob. 3DQCh. 38 - Prob. 4DQCh. 38 - Prob. 5DQCh. 38 - Prob. 6DQ
Ch. 38 - Prob. 7DQCh. 38 - Prob. 8DQCh. 38 - Prob. 9DQCh. 38 - Prob. 10DQCh. 38 - Prob. 11DQCh. 38 - Prob. 12DQCh. 38 - Prob. 13DQCh. 38 - Prob. 14DQCh. 38 - Prob. 1RQCh. 38 - Prob. 2RQCh. 38 - Prob. 3RQCh. 38 - Prob. 4RQCh. 38 - Prob. 5RQCh. 38 - Prob. 6RQCh. 38 - Prob. 7RQCh. 38 - Prob. 8RQCh. 38 - Prob. 9RQCh. 38 - Prob. 10RQCh. 38 - Prob. 11RQCh. 38 - Prob. 12RQCh. 38 - Prob. 13RQCh. 38 - Prob. 1PCh. 38 - Prob. 2PCh. 38 - Prob. 3PCh. 38 - Prob. 4P
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