MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Question
Chapter 9, Problem 4QE
(a)
To determine
Explain the movement of two countries from the initial point to the new point.
(b)
To determine
Identify the total production for the two countries.
(c)
To determine
Identify the
(d)
To determine
Identify the change in analysis if the per unit cost of production falls with rising output.
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Students have asked these similar questions
Draw the production possibility curve for each country using the data provided in the table.
b. Which country has an absolute advantage in what product? Which country has a comparative advantage in what product? Show your work!
c. Without trade, what is the price of food in terms of computers for both countries? Showyour work!
d. What is the range of prices (i.e., the CPC) at which trade can occur? Also, show (a) the possible CPC for each country and (b) the possible production and consumption possibility lines for both countries after trade. Show your work!
Who are the winners and losers of the free trade between two countries? Can free trade between the two countries make consumers of both countries better off?
In answering this question, consider discussing:
How are you and your household connected to the global economy? Which imported goods and services do you buy?
Are your consumption patterns based on comparative advantage?
How do US trade patterns, based on comparative advantage, contribute to income inequality in the US, according to the Heckscher-Ohlin model?
How has trade affected international income inequality?
What were some recent tariffs? Who really pays the cost of tariffs?
Y
100
Country A
X
Y
40
Country B
40
X
20
a) How much of Good Y will Country B produce if they specialize in their comparative advantage? 40
b) By themselves, if Country B produces 18 units of Y, what is the maximum amount they could produce of Good X? 18
c) If the terms of trade proposed are 5 X for 10Y, how much will Country B be able to consume of Good Y after trade if they specialize in
their comparative advantage before trading? 40
Chapter 9 Solutions
MICROECONOMICS
Ch. 9.1 - Prob. 1QCh. 9.1 - Prob. 2QCh. 9.1 - Prob. 3QCh. 9.1 - Prob. 4QCh. 9.1 - Prob. 5QCh. 9.1 - Prob. 6QCh. 9.1 - Prob. 7QCh. 9.1 - Prob. 8QCh. 9.1 - Prob. 9QCh. 9.1 - Prob. 10Q
Ch. 9 - Prob. 1QECh. 9 - Prob. 2QECh. 9 - Prob. 3QECh. 9 - Prob. 4QECh. 9 - Prob. 5QECh. 9 - Prob. 6QECh. 9 - Prob. 7QECh. 9 - Prob. 8QECh. 9 - Prob. 9QECh. 9 - Prob. 10QECh. 9 - Prob. 11QECh. 9 - Prob. 12QECh. 9 - Prob. 13QECh. 9 - Prob. 14QECh. 9 - Prob. 15QECh. 9 - Prob. 16QECh. 9 - Prob. 17QECh. 9 - Prob. 18QECh. 9 - Prob. 19QECh. 9 - Prob. 1QAPCh. 9 - Prob. 2QAPCh. 9 - Prob. 3QAPCh. 9 - Prob. 4QAPCh. 9 - Prob. 5QAPCh. 9 - Prob. 1IPCh. 9 - Prob. 2IPCh. 9 - Prob. 3IPCh. 9 - Prob. 4IPCh. 9 - Prob. 5IP
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Similar questions
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- To the right are hypothetical production possibilities tables for New Zealand and Spain. Each country can produce apples and plums. Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following:a. What is each country’s cost ratio of producing plums and apples.b. Which nation should specialize in which product? c. Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples. (Plot these lines on your graph.) d. Suppose the optimum product mixes before specialization and trade were alternative B in New Zealand and alternative S in Spain. What would be the gains from specialization and trade?arrow_forwardIn Country T, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice. In Country Y, it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice. Country T has a comparative advantage over Country Y in cocoa. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it; however, this conclusion stems from which of these inaccurate assumptions? Multiple Choice We have assumed constant returns to scale. We have assumed the prices of resources and exchange rates in the two countries are dynamic. We have assumed there are barriers to the movement of resources from the production of one good to another within the same country. We have assumed that agrarian nations do not specialize in producing particular products. We have assumed diminishing returns to specialization.arrow_forwardImagine that it takes an average Australian miner 10 hours to mine a metric ton of coal and 20 hours to mine a metric ton of manganese. It takes the average South African miner 4 hours to mine a metric ton of coal and 12 hours to mine metric ton of manganese.Create a table to show how productive each miner is in a day. a. In what task does each miner have a comparative advantage? b. Which resource will each country import? How about export? c. Explain how markets provide the opportunity for the mining companies to specialize and earn gains from trade.arrow_forward
- c) Will both nations gain if 1 autos can be exchanged for 20 computers? d) Will both nations gain if 10 autos can be exchanged for 1 computers? e) Will both nations gain if 10 autos can be exchanged for 20 computers? f) What do your answers suggest about the effect of the terms of trade on the gains from trade for each nation and what a mutually beneficial terms of trade might be?arrow_forwardSuppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazillian worker can produce 150 clothes or 10 cars. Each country has 8 hours available. Who has a comparative advantage in the production of clothes? Who has a comparative advantage in the production of cars? What is the opportunity cost for cars?arrow_forwardA country produces two goods: coconuts and umbrellas. Their production possibilities frontier (PPF) places coconuts on the x-axis and umbrellas on the y-axis. How would a drought that makes it difficult to grow coconuts but does not affect the production of umbrellas change the PPF? Neither the value of the x-intercept nor the y-intercept would change The value of the y-intercept would increase but the value of the x-intercept would not change The value of the x-intercept would increase but the value of the y-intercept would not change Both the value of the x-intercept and the y-intercept would increase The value of the y-intercept would decrease but the value of the x-intercept would not change The value of the x-intercept would decrease but the value of the y-intercept would not changearrow_forward
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