Consider the given problem here there are “10 million” workers each can produce either “2 cars” or “30 bushels of wheat”, => the labor requirement for both the goods are given by “1/2 = 0.5” and “1/30”. So, the PPF is given by.
=> C/2 + W/30 = 10 (in million), where “C=cars” and “W=bushels of wheat”.
The opportunity cost of producing a car in Canada is “(1/2)/(1/30) = 15” bushels of wheat and the opportunity cost of producing a bushels of wheat in Canada is “1/15” cars. Consider the following fig.
Now, Canada chooses to consume “10 million cars”, => “C=10”, => C/2 + W/15 = 10, => 10/2 + W/15 = 10.
=> 5 + W/15 = 10, => W = 5*15 = 75 bushels of wheat.
Now, suppose that the US offer to buy 10 million cars from Canada in exchange for “20 bushels” of wheat per car, => US will export “10 million cars” in exchange for “10*20 = 200 million bushels of wheat”. So, here if Canada specialize to “wheat”, => will be able to produce total “300 million bushels of wheat” and will export “200 million bushel, => will remain “100 million bushels”. So, here Canada will consume “10 million cars” and “100 million bushels of wheat”.
So, in the above fig we can after trade Canada continue to consume “10 million cars”. So, the Canada will accept the deal that US proposes.
10. Problems and Applications Q4 Suppose that there are 10 million workers in Canada and that...
Cars (millions) co Suppose that there are 10 million workers in Canada and that each of these workers can produce either 2 cars or 30 bushels of wheat in a year The opportunity cost of producing a car in Canada is bushels of wheat, and the opportunity cost of producing a bushel of wheat in Canada is cars. Use the blue line (circle symbol) to draw Canada's production possibilities frontier (PPF) on the following graph. Then use the black point...
4. Problems and Applications Q4 Suppose that there are 10 million workers in Japan and that each of these workers can produce either 2 cars or 20 pushels of wheat in a year. The opportunity cost of producing a car in Japan is bushels of wheat, and the opportunity cost of producing a bushel of wheat in lapan is cars. 5. Problems and Applications Q5 England and Scotland both produce scones and sweaters. Suppose that an English worker can produce...
2. Problems and Applications Q2 An American worker can produce either 5 cars or 9 tons of grain a year. A Japanese worker can produce either 3 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car 1 Ton...
2. Problems and Applications Q2 An American worker can produce either 5 cars or 9 tons of grain a year. A Japanese worker can produce either 3 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car1 Ton of...
Practice Problem Canada and the US both produce wheat and lumber. Assuming Canada and the US are using the same amount of capital and labor, the table below shows what each country is capable of producing on its own wheat lumber (tons) Country (bushels) Canada 40 100 United States 60 30 Who has the absolute advantage in producing wheat? In producing lumber? 1 2. What is Canada's opportunity cost of producing 1 bushel of wheat? What is the United States'?...
8. Problems and Applications Q8 Suppose that in a year an American worker can produce 60 shirts or 30 computers and a Chinese worker can produce 60 shirts or 12 computers There are 1 million workers in each country Use the blue line (circle symbol) to graph the production possibilities frontier (PPF) for the United States, and use the green line (triangle symbol) to graph the production possibilities frontier for China U.S. PPF 21 18 S15 China PPF U.S. without...
8. Problems and Applications Q8 Suppose that in a year an American worker can produce 60 shirts or 30 computers and a Chinese worker can produce 60 shirts or 12 computers. There are 1 million workers in each country. Use the blue line (circle symbol) to graph the production possibilities frontier (PPF) for the United States, and use the green line (triangle symbol) to graph the production possibilities frontier for China. U.S. PPF China PPF Quantity of Computers (Millions) HHHHHHHHHH...
8. Problems and Applications Q2 American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that e ach country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to...
14. Problems and Applications Q8 Suppose that in a year an American worker can produce 100 shirts or 20 computers and a Chinese worker can produce 100 shirts or 10 computers. blue line (circle symbol) to graph the production possibilities frontier (PPF) for the United States, and use the green line (triangle symbol) to graph the production possibilities frontier for China. 30 T 27 U.S PPF China PPF 15 12 U.S. without Trade China without Trade 0 10 20 30...
4. Problems and Applications Q4 An economy consists of three workers: Carlos, Felix, and Larry. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Carlos can either mow 2 lawns or wash 1 car; Felix can either mow 1 lawn or wash 1 car; and Larry can either mow 1 lawn or wash2 cars. For each of the scenarios listed in the following table, determine how many lawns will be...