Almonds Shorts Country (Pounds per hour of labor) (Pairs per hour of labor) Sequoia 4 16 Yosemite 6 12 Suppose that initially Yosemite uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Sequoia uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Sequoia produces 12 million pounds of almonds and 16 million pairs of shorts, and Yosemite produces 6 million pounds of almonds and 36 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts it produces. Sequoia's opportunity cost of producing 1 pound of almonds is almonds is of shorts. Therefore, comparative advantage in the production of shorts. of shorts, and Yosemite's opportunity cost of producing 1 pound of has a comparative advantage in the production of almonds, and ♥ has a

Almonds Shorts Country (Pounds per hour of labor) (Pairs per hour of labor) Sequoia 4 16 Yosemite 6 12 Suppose that initially Yosemite uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Sequoia uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Sequoia produces 12 million pounds of almonds and 16 million pairs of shorts, and Yosemite produces 6 million pounds of almonds and 36 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts it produces. Sequoia's opportunity cost of producing 1 pound of almonds is almonds is of shorts. Therefore, comparative advantage in the production of shorts. of shorts, and Yosemite's opportunity cost of producing 1 pound of has a comparative advantage in the production of almonds, and ♥ has a

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter21: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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Give the three reasons that explain why the division of labor increases an economys level of production.
What is absolute advantage? What is comparative advantage?
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Suppose there exist two imaginary countries, Denali and Congaree. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Country Almonds Shorts (Pounds per hour of labor) (Pairs per hour of labor) Denali 6 12 Congaree 4 16 Suppose that initially Denali uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Congaree uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Denali produces 6 million pounds of almonds and 36 million pairs of shorts, and Congaree produces 12 million pounds of almonds and 16 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries,…
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