Question

I only need part e and f, but i added all the questions for reference! Thanks!

Suppose the hypothetical table below reflects the maximum production levels that are possible for each country when current resources and technology flow to each good's production. Use the information to answer the questions below 1. United States China Engines produced 600,000 200,000 per week Pairs of shoes 300,000 350,000 produced per week a. Draw each country's PPF assuming constant opportunity costs. Assume in the absence of specialization and trade the U.S. produces 300,000 engines and 150,000 pairs of shoes, and China produces 100,000 engines and 175,000 pairs of shoes. Plot these points ON each the appropriate PPF. b. Determine if either country has an absolute advantage Calculate the opportunity cost of producing an additional engine in the U.S., and in China. c. Next, calculate the opportunity cost of an additional pair of shoes for each country d. If these countries adhere to the law of comparative advantage and specialize, which good will China produce? Which good will the U.S. produce? Compared to "world" production levels in part a., by how much does specialization based on comparative advantage increase total output of each good? e. f. If these countries trade 125,000 engines for 125,000 pairs of shoes determine the new consumption levels of each good in each countrv and plot these values on the appropriate PPF vou drew in part a.

Answer 1

Answering e & f