Country X:
Opportunity cost of producing 1 radio = 20/10 = 2 watches
Country Y:
Opportunity cost of producing 1 ratio = 10/20 = 0.5 watches
Option c is correct
Exchanging 1 watch for 1 radio would bring gains to both countries (this price ratio lies between the opportunity costs of both countries)
Country X Country Y WATCHES WATCHES 10 10 RADIOS 20 RADIOS 3. Using equal amounts of...
Assume that in country A, the unit labor requirement for producing good X is 100 hours, and the unit labor requirement for good Y is 20 hours. Meanwhile in country B, the unit labor requirement for producing good X is 80 hours and the unit labor requirement for good Y is 40 hours. Answer the following: Explain which country has an absolute advantage in each good. Explain which country has a comparative advantage in each good. Under the Theory of...
Assume that in country A, the unit labor requirement for producing good X is 100 hours, and the unit labor requirement for good Y is 20 hours. Meanwhile in country B, the unit labor requirement for producing good X is 80 hours and the unit labor requirement for good Y is 40 hours. Answer the following: Explain which country has an absolute advantage in each good. Explain which country has a comparative advantage in each good. Under the Theory of...
Table 3-10 Assume that Japan and Korea can switch between producing cars and producing air rate. Quantity Produced in 2400 Hours Hours Needed to Make 1 Car Airplane 30 150 50 150 Airplane 16 Japan Korea Draw a production possibilities frontier for both Korea and Japan assuming 2400 production hours available. What is the opportunity cost of each country to produce each cost? What country has a comparative advantage in the production of cars? What country has a comparative advantage...
1. Suppose country A can produce 30 units of Corn per time period (if it specializes in Corn). Country A can produce 4 outfits per time period (if it specializes in outfits). If country B specializes in Corn, it can produce 40 units per time period. If country B specialized in Outfits, it can produce 3 outfits per time period. A has a comparative advantage in Corn. B has a comparative advantage in Outfits. neither country has a comparative advantage....
Consider the PPFs in the illustration below: Country Y COMPUTERS Country X 1 2 3 4 7 8 9 10 11 5 5 6 FOOD a. Which country enjoys absolute advantage? b. Country enjoys comparative advantage in the production of Food and Country enjoys comparative advantage in the production of Computers. c. Following the Heckscher Ohlin theorem, Country should specialize in the production of and Country in the production of d. Hence, Country X would show a surplus in the...
L4 X-150 Y 150 Y-300 150 ol Mexico Canada ov 1. The production possibility frontiers of two countries are represented on the graph:s above as straight lines. Let Good X be units of oil (100,000's of barrels) and Good Y be units of automobiles (100,000's of cars). Mexico is currently producing and consuming the goods combination represented by Point A. Canada is currently producing and consuming the goods combination represented by Point B a. Does either country have an absolute...
17. In the following graph showing indifference curves for country A (a) and for country B (b) in a situation where both countries have the same production possibilities frontier, in autarky, Px/Py in country A is Px/Py in country B, and, if trade begins, country A will export good good Y sood X a. less than; X b. less than; Y c. greater than; X d. greater than; Y 18. Given the following diagram showing a fixed-quantity production-possibilities frontier, a...
Food Food A (Y) X 200 Y-200 X-6667 Y=100 dles Oil(x) United States United States Canada S. The production possibility frontiers of two counties are represented on the graphs above. The production possibility frontiers are represented as straight lines. Let Good X be units of oil and Good Y be units of food. The United States is currently producing and consuming the goods combination represented by Point A. Canada is currently producing and consuming the goods combination represented by Point...
Answer Bank Through specialization and trade, it is possible for a country to consume a combination of goods that is beyond its original production possibilities frontier. Countries trade for goods in which they do not have a comparative advantage. and therefore, would never trade with nations that have similar resource endowments. When two countries choose to partake in international trade, it is a mutually beneficial activity for both countries. Wealthier countries always benefit more from international trade than poorer countries....
Question 4: Consider two countries A & B with the following PPF's for production of cookies (C) and milk (M): Country A: C-100-5M Country B: C-20-0.5M Part A: In two separate graphs with C on the Y-axis and M on the X-axis, graph both PPFs. Part B: Determine which country has an absolute advantage in milk production. Part C: Determine which country has a comparative advantage in milk production. Part D: If the countries decide to trade, which good will...