can someone help with part GCase Study1.Assume that the continent of Mainland has only two countries, Alpha and Beta, whichproduce only two goods, corn, and peanut. Each country has 42 labor hours per weekallocated to the production of corn or peanut. Producing a ton of corn costs 2.8 hours to Alphaand 1.4 hours to Beta. On the other side, each ton of peanut costs 1.68 hours to Alpha and 4.2hours to Beta.Using the above case study, respond to the following Questions by showing all your work:a. Draw the production possibilities frontier of each country and provide its equationwith peanuts on the x-axis.b. Assume that each country decides to use half of its resources in the production ofeach good. Show these points on the graphs for each country as point A.c. Can Alpha produce Beta produce 20 tons of corn and 15 tons of peanut each? Justifyyour answer. (Hint: Use the PPF equations.)d. If these countries choose not to trade, what would be the total world production ofpopcorn and peanuts?e. Now suppose that each country decides to specialize in the good in which each has acomparative advantage. By specializing, what is the total world production of eachproduct now?f. If each country decides to trade 10 units of popcorn for 10 units of peanuts, show onthe graphs the gain each country would receive from trade. Label these points B. Atwhat terms of trade did the two countries trade corn and peanut?g. If the two countries decided to produce corn and peanut together as one business,draw the combined PPF of the two countries and indicate the specialization point onthe combined PPF.

Alpha has a comparative advantage in the production of peanuts and Beta has a comparative advantage…

Answered: g. If the two countries decided to…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 5PA

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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?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
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 Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
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?
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?

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g. If the two countries decided to produce corn and peanut together as one business, draw the combined PPF of the two countries and indicate the specialization point on the combined PPF.