Question

Please help me with my econ homework?

4. The countries of Orion and Scorpius are small mountainous nations. Both produce granite and blueberries. Each nation has a labor force of 800. The table below gives production per month for each worker in each country. Assume productivity is constant and identical for each worker in each country. Orion and Scorpius Tons of Granite 6 Bushels of Blueberies Orion workers Scorpius workers 2. 2.4 2. has a comparative advantage in the production of granite has a comparative advantage in the production of 1.2 Use the graph to sketch the PPFs for both countries. 1.) Using the line drawing tool, sketch the production possibility frontier for Orion. 0.0 0.8 16 24 3.2 4.0 4.8 5.6 6.4 7.2 8.0 Blueberries (thousands of bushels) Label your line PPF Orion 2.) Using the line drawing tool, sketch the production possibility frontier for Scorpius. Label your line 'PPF Carefully follow the instructions above and only draw the required objects. Given that, without trade, each country will want to consume an equal number of tons of granite and bushels of blueberries. Orion will produce and consume units of both granite and Scorpius will produce and consume units of both granite and Total production and consumption will be units of both granite If the countries decide to trade and each country completely specializes, Orion will produce tons of granite and Scorpius will produce bushels of blueberries. World production of granite increases by production of blueberries increases by tons and world bushels.

Answer 1

1) Orion has a comparative advantage in granite

Reason- opportunity cost of granite

In orion(9/6) which is less than in scorpius(7/3)

2) Scorpius has a comparative advantage in blueberry

Reason- opportunity cost of blueberry

In scorpius(3/7) which is less than in orion(6/9)

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Orion will produce and consume 2880 units of both granite and blueberry

Scorpius will produce and consume 1680 units of both granite and blueberry

Total production and consumption increases by 4560.

Reason- No. Of workers in granite*6= No. Of workers in blueberry*9

And No. Of workers in granite + No. Of workers in blueberry=800

On solving the two equation , no. Of workers in blueberry= 320 and granite=480

If the countries trade, orion produce 4800 granite

And scorpius produce 5600 blueberry. (See the ppf graph)

World production of granite increases by 240 (4800-4560)

and Blueberry increases by 1040 (5600-4560) units.

orion will consume 2880 tons of granite and 3920 bushels of blueberry.

scorpius will consume 1920 tons of granite and 1680 bushels of blueberry.

Orion consumers increases consumption of blueberries and no change in consumption of granite.

Scorpius consumers no change consumption of blueberries and increases in consumption of granite.

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