. Suppose the countries specialize. Which country will produce cars? D. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”
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2-6 ONLY ANSWER CD Suppose County A and B produce only paper and cars. Country A can produce 8 tons of paper or 4 million cars yearly. Country B can produce 25 tons of paper or 5 million cars yearly.
- Draw the
production possibilities frontier for each country.
2. Both countries want 2 million cars each year and as much paper as they can produce along with 2 million cars. Find this point on each production possibilities frontier and label it “X1.”
C. Suppose the countries specialize. Which country will produce cars?
D. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”
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- Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
- Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. a. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. b. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they wanttogainfromtrading withVenezuela? Note: Wecanthinkofthis“ask”astherelativepriceor trade price of lumber. c. Is the Canadian “ask” you identified in (b) also beneficial for Venezuelans? Use…Suppose County A and B produce only paper and cars. Country A can produce 8 tons of paper or 4 million cars yearly. Country B can produce 25 tons of paper or 5 million cars yearly. Draw the production possibilities frontier for each country. 2. Both countries want 2 million cars each year and as much paper as they can produce along with 2 million cars. Find this point on each production possibilities frontier and label it “X1.” 3. Suppose the countries specialize. Which country will produce cars 4. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”2-6 Suppose County A and B produce only paper and cars. Country A can produce 8 tons of paper or 4 million cars yearly. Country B can produce 25 tons of paper or 5 million cars yearly. 1. Draw the production possibilities frontier for each country. 2. Both countries want 2 million cars each year and as much paper as they can produce along with 2 million cars. Find this point on each production possibilities frontier and label it “X1.”
- 5. Suppose that in an hour an American worker can produce 200 clothes or 20 cars, while a Brazilian worker can produce 150 clothes or 10 cars. Each country has 8 hours available. Choose one option for the questions Who has the comparative advantage in the production of cars? What is the opportunity cost for cars? Choose one option for the questions above a. USA produce with lower opportunity cost b. Brazil produce more than USA using less resources c. 1/10 clothes for USA and 1/15 clothes for Brazil d. Brazil produce with lower opportunity cost e. 10 clothes for USA and 15 clothes for Brazil f. Brazil produce more than USA using more resources g. Brazil produce more than USA using same resources h. Neither USA or Brazil i. USA produce more than brazil using less resources j. USA produce more than brazil using same resources k. 10 cars for USA 15 cars for brazil l. 1/10 cars for USA 1/15 cars for brazil m. USA produce more than brazil using more resources.Consider the PPF diagram drawn below, for two countries that are free to trade with one another. A B PPF₂ PPF₁ Select one: D a. I only. b. I and II only. c. Il only. d. I, II and III. C E Which of the following production combinations is/are INEFFICIENT? I. Country 1 produces at point C and country 2 produces at point D. II. Country 1 produces at point E and country 2 produces point at B. III. Country 1 produces at point E and country 2 produces at point A X1. Consider the countries of Canada and Mexico. In one month, Canada can produce a maximum of 150 wheat or 200 barley. Mexico can also maximize production of 150 wheat, but their maximum barley output is 150. a. Assuming each country devotes half of its resources to growing each crop, calculate the production level of each crop in each country and overall production. b. Determine comparative advantage in each and show how you found this. c. Calculate production levels in each country of each crop under specialization and also overall production. d. How much of each crop was gained by specialization? 2. Using cheddar cheese, explain in two sentences or fewer the following: a. Income Effectb. Substitution Effectc. Law of Diminishing Marginal Returns
- a. What is the opportunity cost of 1 ton of oranges for the nations of Argentina and Brazil, respectively?A. .25 ton of apples and .5 ton of applesB. 10 tons of apples and 4 tons of applesC. 2 tons of apples and 4 tons of apples D. 4 tons of apples and 2 tons of apples E. .5 ton of apples and .25 ton of apples b. What is the opportunity cost of 1 ton of apples for the nations of Argentina and Brazil, respectively?A. 4 tons of oranges and 2 tons of orangesB. 2.5 tons of oranges and .4 tons of orangesC. .25 tons of oranges and .5 tons of oranges D. 2 tons of oranges and 4 tons of oranges E. 5 tons of oranges and .25 tons of oranges c) Based on your answers in (a) and (b), which country will specialize in apples and which one in roanges? How did you figure this out?. The countries of Orion and Scorpius are small mountainous nations. Both produce granite and blueberries. Each nation has a labor force of 800. The following table gives production per month for each worker in each country. Assume productivity is constant and identical for each worker in each country. Orion workers Scorpius workers Tons of Granite Bushels of Blueberries 18 6 3 12 Productivity of one worker for one month a. Which country has an absolute advantage in the production of granite? Which country has an absolute advantage in the production of blueberries? b. Which country has a comparative advantage in the production of granite? Of blueberries? c. Sketch the PPF's for both countries. d. Show that specialization and trade can move both countries beyond their PPF'sFrance and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In France it takes two hours foreach worker to harvest green beans and two hoursto harvest a tomato. Tunisian workers need only one hour to harvest the tomatoes but four hours to harvest green beans. Assume there are only two workers, one in each country, and each works 40 hours a week. a. Draw a production possibilities frontier for each country. Hint: Remember the production possibility frontier is the maximum that all workers can produce at a unit of time which, in this problem, is a week. b. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. c. Identify which country has the comparative advantage. d. How much would France have to give up in termsoftomatoestogainfromtrade? How much would it have to give up interms o fgreen beans?