Ans)option b). According to the theory of comaparative advantage a trade is possible between two countries when one country has an absolute advantage in the production of both commodities but a comparative advantage in the production of one commodity than in other.As in the above example Pestoland produces both the goods pasta and pesto with more labour efficiency because of high labour productivity.Option b.) is correct for pestoland as it has comparative advantage because OA units of paesto produce by pestoland and OB is the pasta produce and similarly OC is the units of pesto produced by pastaland and OD is the units of pasta produced by pastaland.Clearly second option says
OA/OB <OC/OD rearranging it For comparison of comparitive cost advantage
OA/OC<OB/OD that is pestoland has less comparitive cost of production of pesto fraction OA/OC cost of production of pesto with respect to pastaland is less than OB/OD that is comaprarive cost of production of pasta with comparating to pastaland.
Pesto Pestoland Pastaland ODF Pasta in Figure 22-7, AB represents the production possibilities of Pestoland and...
Figure 3-15 Perry’s Production Possibilities Frontier Jordan’s Production Possibilities Frontier 51. Refer to Figure 3-15. Perry has a comparative advantage in the production of a. poems and Jordan has a comparative advantage in the production of novels. b. neither good and Jordan has a comparative advantage in the production of novels. c. novels and Jordan has a comparative advantage in the production of neither good. d. novels and Jordan has a comparative advantage in the production of poems.
able Production Possibilities Schedule I) Use Table: Production Possibilities Schedule I. The opportunity cost of producing the third unit of consumer goods is units of capital goods. Table: Production Possibilities Schedule I Alternatives Consumer goods per period 0 Capital goods per period 30 28 24 1810 8 2 (Figure: Comparative Advantage) Use Figure: Comparative Advantage. Westland has a comparative advantage in producing: Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and...
21. (Table: Production Possibilities for Machinery and Petroleum) Use Table: Production Possibilities for Machinery and Petroleum. The opportunity cost of is in the United States as (than) in Mexico. Table: Production Possibilities for Machinery and Petroleum Machinery (M) Petroleum (P) Countries (units) United States 80 40 Mexico 60 180 O machinery; the same O petroleum; the same O petroleum; more O petroleum; less 22. (Table: Production Possibilities for Machinery and Petroleum) Use Table: Production Possibilities for Machinery and Petroleum. In...
Cars (thousands per week) 24 F G The figure shows an economy's production possibilities frontier and identifies some production points. We can produce all combinations_ O A. inside the PPF, on the PPF, and outside the PPF O B. inside the PPF and on the PPF OC. on the PPF but not inside or outside the PPF OD. on the PPF and outside the PPF O E. inside the PPF but not on the PPF or outside the PPF Which...
0 The figure given below represents the production possibilities curve for goods and services in an economy 0 Figure 2.3 0 • Curvey • Curve X • • Services • cess ) O Refer to Figure 2.3. The movement from Curve X to Curve Y indicates O a contraction in the production of services OR YOU b. expansion in the ability to produce goods. Tools O c. expansion in the ability to produce services. d. contraction in the production of...
The figure shows an economy's production possibilities frontier and identifies some production points. Cars (thousands per week) Which points are efficient? Qoo •F G O A. Points A, B, and C only O B. Points Fand G only O C. Points A, B, C, D, and E OD. Points D and only O E. Points A, B, C, F, and G •DE Which points are inefficient? O A. Points D and only OB. Points A, B, and only O C....
The production possibilities frontiers below show how much Dave and Sam can each produce in 8 hours of time Dave's Production Possibilities Sam's Production Possibilities 8מ 11 quarts 11 10 10 9 9 8 7 9 10 2 3 6 7 4 5 6 4 5 8 9 10 Cake Cake a. Who has an absolute advantage in Ice Cream? How about in Cake? Explain. b. Who has a comparative advantage in Ice Cream? How about in Cake? Explain. c....
Figure 3-9 Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possbuitiles Fromtier 5 10 15 20 23 30 35 40 45 5r 5 10 15 2 25 3 3540 30 8. Refer to Figure 3-9 a) If Uzbekistan and Azerbaijian each divides its time equally between making bolts and making nails, then total production is bolts andnails b) Label these points on the graph for each country as point A e) If Uzbekistan and Azerbaijan switch from each country dividing its time...
Figure 3-3 Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier 300 00G Aoo 109 0 200 350 300 350 400 a 8 Refer to Figure 33 a) Bob's opportunity cost of one burrito is 1 33 tacos and Enid's opportunity cost of one burrito is b) If Bob and Enid each divide their time equally between the production of tacos and burritos, then total production is 2 50 burrios and 400 ac c) If Bob and Enid decide to completely...
If a family's annual disposable income rose from $60,000 to $65,000 and their desired consumption expenditures rose from $50,000 to $54,000, it can be concluded that the family's OA) average propensity to save is 0.8. OB) average propensity to consume is 0.8 OC) marginal propensity to consume is 0.8 OD) marginal propensity to consume is $800. There will be a favourable change in a nation's terms of trade if the OA) export and import prices stay the same. OB) export...