In the small country of Fictionia, there are 30 workers. Each worker can produce 4 shirts...
In the small country of Fictionia, there are 30 workers. Each worker can produce 4 shirts in one day, or bake 1 loaf of bread. These are the only two goods the can be produced.
Part A) Draw the production possibility frontier (PPF) for Fictionia, showing the combinations of shirts (S) and bread (B) that can be produced in a day. Put shirts on the vertical axis. Label both intercepts, and label the curve as “PPF”.
Part B) What is the equation for the production possibility frontier? You can derive this equation using the following idea:
1. Let WS be the number of workers allocated to shirt production. What is the relationship between WS and NS, the number of shirts produced?
2. Similarly, what is the relationship between WB, the number of workers allocated to bread production, and NB, the amount of bread produced?
3. The total number of workers in Fictionia is 30. Use this information to derive an equation relating NS and NB.
Part C) The consumption possibility frontier (CPF) describes the combinations of shirts and bread that Fictionia can feasibly consume in a day. On the same diagram as Part A, draw Fictionia’s CPF, assuming that it does not trade with any other country. Label this curve “CPF 1”.
Part D) Suppose that the world price of bread is 3 shirts. So that 1 loaf of bread is sold for 3 shirts. What is the price of shirts, in loaves of bread? If Fictionia can trade any amount of shirts or bread at these prices, will it choose to trade with the rest of the world? If so, what will it export?
Part E) Draw the CPF if Fictionia trades with the rest of the world. Label both intercepts, and label the curve as “CPF 2”.
Homework Answers
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In the small country of Fictionia, there are 30 workers. Each
worker can produce 4 shirts...
Answer question 4 based on previous information. 1. Suppose that each worker in the home country...
Answer question 4 based on previous information.
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Suppose that in a year an American worker can produce 60 shirts or 30 computers and...
Suppose that in a year an American worker can produce 60 shirts
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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.
Suppose that without trade the workers in each country spend
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Suppose that in a year an American worker can produce 80 shirts or 20 computers and...
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8. Problems and Applications Q8 Suppose that in a year an American worker can produce 60...
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*MULTIPLE PART QUESTION* There are two countries in the world, France and Germany, and both can...
*MULTIPLE PART QUESTION*
There are two countries in the world, France and Germany, and
both can use workers to produce either cheese or bread. France can
produce either a ton of cheese or a ton of bread with 3 workers.
Germany can produce a ton of cheese with 6 workers and a ton of
bread with 3 workers. France has 120 workers; Germany has 150
workers. Initially, there is no trade between the two
countries.
There are two countries in...
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Answer question 4 based on previous information.
1. Suppose that each worker in the home country can produce three loaves of bread or two shirts. Assume that Home has four workers a. Graph the production possiblities frontier for the Home country. b. What is the no-trade relative price for bread at Home? 2. Suppose that each worker in the Foreign country can produce two loaves of bread or three shirts. Assume that Foreign also has four workers. a. Graph the...
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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.
Suppose that without trade the workers in each country spend
half their time producing...
Suppose that in a year an American worker can produce 80 shirts or 20 computers and a Chinese worker can produce 60 shirts or 20 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 psies frontier for China 30 27 24 21 18 China PPF 15 U.S. without Trade China without Trade...
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 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...
*MULTIPLE PART QUESTION*
There are two countries in the world, France and Germany, and
both can use workers to produce either cheese or bread. France can
produce either a ton of cheese or a ton of bread with 3 workers.
Germany can produce a ton of cheese with 6 workers and a ton of
bread with 3 workers. France has 120 workers; Germany has 150
workers. Initially, there is no trade between the two
countries.
There are two countries in...
26. Two people make up a small economy producing oats and/or shirts. The table below shows the maximum each individual can produce in one day for each good (and any linear combination). Oats Shirts Sam 300 100 Lindsay 150 75 a. Who has the comparative advantage in producing Oats? In producing shirts? b. In terms of shirts, what is the cost of producing one unit of oats for For Lindsay? c. If the total number of shirts produced is 100,...
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