Question 3: Production Possibilities Frontier Cheese and Wine Table: Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours Cheese Wine England 1 France 8 Wine Cheese 5 40 120 8-714 5 2 5 10 20 Refer to the table. Assume that England and France each has 40 labor hours available. Before specialization and trade, each country divides its time equally between the production of cheese and wine. Then, both countries decide they could be better off if they specialized in the production of one good and traded with each other. If England specializes in cheese and France specializes in wine and the countries trade 10 units of cheese for 8 units of wine, England's gains from trade will be a. 30 units of cheese and 8 units of wine b. 10 units of cheese and 4 units of wine c. 7.5 units of cheese and 2 units of wine Od. 20 units of cheese and 4 units of wine 6125 375 A

Question 3: Production Possibilities Frontier Cheese and Wine Table: Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours Cheese Wine England 1 France 8 Wine Cheese 5 40 120 8-714 5 2 5 10 20 Refer to the table. Assume that England and France each has 40 labor hours available. Before specialization and trade, each country divides its time equally between the production of cheese and wine. Then, both countries decide they could be better off if they specialized in the production of one good and traded with each other. If England specializes in cheese and France specializes in wine and the countries trade 10 units of cheese for 8 units of wine, England's gains from trade will be a. 30 units of cheese and 8 units of wine b. 10 units of cheese and 4 units of wine c. 7.5 units of cheese and 2 units of wine Od. 20 units of cheese and 4 units of wine 6125 375 A

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 31P: Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil...

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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.
What is comparative advantage?
Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.