Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 9, Problem 5QE

(a)

To determine

Illustration of the production possibility curve.

(b)

To determine

Identify the countries with comparative advantage in the production of cars and gourmet meals.

(c)

To determine

Explain the situation when both countries are specialized in the production of same good.

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Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods.   Indonesia United States Cloth 50 3 Machines 100 5   2.5 Indonesia is a developing country and the United States a developed country. Do you think Indonesia benefits from trade with the United States? What should the trade ratio be for Indonesia to benefit from trade.
How can you say that a country participates in the global market?
Which country has comparative at producing good x. How can you tell. Which country has a comparative advantage at producing y
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