Maria and Shayla produce pickles and cheese. Maria's production function is Op 424-40c Shayla's production function is Op 480-30c These two people are currently not trading. Maria is currentily producing and consuming 200 pickles and 56 cheeses. Shayla is currently producng and consuming 210 pickles and 90 cheeses. Then these two people specialize and trade based on comparative advantage The ewma of trade are 220 pickles for 67 cheeses What are the gains from trade for Shayla in terms of CHEESES?
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- Assume that Cliff and Paul were both producing wheat and corn, and each was dividing their time equally between the two. Then they decide to specialize in the product they have a comparative advantage in and trade 3 bushels of wheat for 3 bushels of corn. What would Cliff now be able to consume? Question 10 options: 3 bushels of wheat and 3 bushels of corn 3 bushels of wheat and 4 bushels of corn 4 bushels of wheat and 3 bushels of corn 2 bushels of wheat and 3 bushels of cornConsider two countries, Home and Foreign and two goods appples and bananas. In the Home country the unit labour requiremrents for apples and bananas are repectively 3 and 2. In the Foreign country the unit labour requirements for apples and bananas are 5 and 1 respectively. The Home country has a labour force of 1200 and the Foreign country has a labour force of 800. Graph the Production Possiblity Frontiers for each of the two countries. What are the prices of apples in terms of bananas in both countries in the absence of trade? Why? Construct the world relative supply function. Suppose that the world relative demand takes the following form: demand for ap- ples/demand for bananas = banana price/apple price. Draw the world relative de- mand curve superimposed on the world relative supply curve. What is the equilibrium relative price of apples under free trade? Describe the pattern of trade. Show that each of the two countries gain from trade. Suppose that instead of 1200…Q2. Suppose that there are two countries (A and B) and two goods (a labor-intensive good X, textile, and a capital-intensive good Y, electronics). The two countries have identical demand for the two goods but different labor and capital endowments. Suppose (Px/Py)A < (Px/Py)B in autarky. Identify the capital-abundant country and the labor-abundant country, respectively. Use a PPF-indifference-curve graph to identify the autarky equilibrium for country B. In the same graph, show country B's gains from trade when the two countries trade at a level of Px/Py that is between the two countries' autarky price ratios. In the above graph, identify the trade triangle (including export and import quantities) for country B. What would be the effect of trade on country B's relative nominal wage rate, i.e., the ratio of nominal wage rate relative to nominal capital rental rate (w/r)? Illustrate your answer graphically. Your answer:
- Given that Sandy can produce 10 economics reports or make 2 sales calls and Tim can produce 2 economics reports or make 1 sales call, we can conclude that, a) Tim should produce both economics reports and sales calls. b) Sandy should specialize in economics reports, and Tim should specialize in sales calls. c) Tim should specialize in producing economics reports, and Sandy should specialize in producing sales calls. d) Sandy should produce both economics reports and sales calls since she cannot possibly gain from trade with TimAssume an economy producing only two goods (shoes and computers) with a fixed amount ofproductive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions:i. Draw the economy’s production possibility frontier on hindsight of the relevantassumption.ii. Why are points outside the frontier unattainable? iii. Identify three ways by which the economy can attain the level of production outside thePPF. iv. What happens to the PPF when technological change overwhelmingly favours theproduction of computers? v. What happens to the PPF when the economy discovers an improved technology forproducing shoes? vi. Assume now that the sacrifice ratio is greater than 1, show what will happen to the…Consider the production of handmade rugs and assembly robots in India and Canada. Assume that Canada is relatively abundant in capital and that India is relative abundant in labour. Furthermore assume that the production technology for rugs and robots is the same in both countries. Draw production possibilities frontiers for each country keeping the production of rugs in the horizontal axis and the production of robots in the vertical axis. Assuming that consumer preferences are the same in both countries, add indifference curves and relative price lines under autarky. What are the differences in the relative price of rugs between the countries under autarky?
- Consider an exchange economy with 2 agents and 2 goods. In an Edgeworth-Bowley diagram, show and illustrate that if both agents have the same preferences, the contract curve is a straight line from the bottom left-hand corner to the top right-hand corner. Does it follow that if the agents do not have the same preferences, the contract curve is not a straight line? Suppose the two agents have the same endowments and the same preferences. Is mutually beneficial trade possible? Illustrate in an Edgeworth Bowley diagram. State and explain Walras Law. What are the implications of Walras’s Law? Illustrate Walras Law in an Edgeworth-Bowley diagram.Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two goods are produced and consumed: rice and beans. The production opportunity cost for Casey is 4.00 kg4.00 kg of rice for every kilogram of beans. Rick has a production opportunity cost of 2.00 kg2.00 kg of rice for every kilogram of beans. Casey eventually realizes that, through trade, both individuals can be better off. Rick is willing to trade. What price can be settled between these two parties such that both individuals can enjoy more rice and beans? Give your answer to two decimals.Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 1 and 2 in country B. Unit labour cost for bananas are 2 in country A and 5 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true? A Country B has a comparative advantage in producing bananas. B Allowing for international trade, the production of 50 apples and 50 bananas can occur in a global market equilibrium feasible, but not in market equilibria under autarky. C Each country has an absolute advantage. D Allowing for international trade, the production of 50 apples and 50 bananas is feasible, but not under autarky. E Under autarky, the relative price for apples (price for apples/price for banans) equals 0.5 in country A and 0.4 in country B. F Country A will produce bananas, with or…
- Suppose two economies Home (H) and Foreign (F) produce two goods, bread and wine, with only one production factor: labour. Production technology, expressed as marginal product of labour (MPL), is given in the following table: Technologies expressed as MPL Bread Wine Home 1/6 1/12 Foreign 1/4 1/2 Suppose that Home has 2400 units of labour and Foreign has 1800 units of labour. a. ) Derive the Production Possibilities Frontier (PPF) and the Consumption Possibility Frontier (CPF) for Home and Foreign, with bread on the horizontal axis and wine on the vertical axis. What is the autarky equilibrium price of bred relative to wine in each country? b.) What country has the absolute advantage in producing each good? What country has the comparative advantage in producing each good? Briefly explain the difference between these two concepts. Suppose both countries are now free to trade. The world relative price of bread is 1. c. What is the pattern of specialisation and trade?…The International Monetary Fund (IMF) expects the Sultanate's GDP to grow 3 per cent next year compared to -2.8 per cent in 2020, as the COVID- 19 pandemic adversely impacts economies globally, a report said. According to the IMF's World Economic Outlook, oil exporting nations in the Middle East and Central Asia are expected to see a 3.9 per cent decline in GDP growth this year, rising however to 4.6 per cent in 2021, while growth in oil-importing countries is expected to decline to -0.8 per cent this year, rising to 2.9 per cent next year. "The COVID-19 pandemic is inflicting high and rising human costs worldwide," the multilateral global lender said in the Executive Summary of its report. "Protecting lives and allowing health care systems to cope have required isolation, lockdowns, and widespread closures to slow the spread of the virus. The health crisis is therefore having a severe impact on economic activity." According to the Fund, many countries face a multi-layered crisis…Robinson is trapped on an island and can produce Fish (F) or Coconuts (C) with his time. Let LF and LC denote labor hours dedicated to fishing or gathering coconuts, respectively. Robinson's technological relationships for producing fish is given by: F=12LF Robinson's technological relationships for producing coconuts is given by: C=14LC Which of the following is/are correct? check all that apply - Robinson becomes less productive at the margin for each additional hour spent fishing - every hour spent harvesting coconuts is equally productive at the margin in terms of labor usage - Robinson becomes less productive at the margin for each additional hour spent harvesting coconuts - every hour of labor spent fishing is equally productive at the margin in terms of labor usage