Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier soydeans 20 20 Isedeans | (in pounds) 18 18 (spunod ne) 16 16 14 14 12 12 10 - 10 8 8 6 4 4 ++> 2 4 6 8 10 12 14 16 18 20 cefee (in pounds 2 4 6 8 10 12 14 16 18 20 coffe (in pounds, Refer to Figure 3-19. If Chile and Colombia each spends all of its time producing the good in which it has a comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds of soybeans, then Chile will consume O a. 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. O b. 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. O c. 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. O d. 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans.

Chile's Production Possibilities Frontier Colombia's Production Possibilities Frontier soydeans 20 20 Isedeans | (in pounds) 18 18 (spunod ne) 16 16 14 14 12 12 10 - 10 8 8 6 4 4 ++> 2 4 6 8 10 12 14 16 18 20 cefee (in pounds 2 4 6 8 10 12 14 16 18 20 coffe (in pounds, Refer to Figure 3-19. If Chile and Colombia each spends all of its time producing the good in which it has a comparative advantage and the countries agree to trade 7 pounds of coffee for 5 pounds of soybeans, then Chile will consume O a. 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. O b. 7 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans. O c. 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 5 pounds of soybeans. O d. 23 pounds of coffee and 7 pounds of soybeans and Colombia will consume 5 pounds of coffee and 11 pounds of soybeans.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 8PA

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Similar questions

Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain.
France and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In France it takes two hours for each worker to harvest green beans and two hours to 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. 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. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. Identity which country has the comparative advantage. How much would France have to give up In terms of tomatoes to gain from trade? How much would it have to give up in terms of green beans?
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.
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.