Suppose that in the UK 15 million cars could be produced with the same resources as 13 million airplanes. Suppose that in Poland 15 million cars could be produced with the same resources as 14 million airplanes. Which country has a lower opportunity cost in producing cars and why? In a one-factor economy, you have the following information: Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. Foreign, has a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1. Graph Home’s & Foreign production possibility frontier. Specify the maximum quantity that can be produced from both goods. Find the absolute value of the slope. Compare the opportunity cost of apples in Home and in Foreign. If apples are sold at $9/unit and bananas are sold at $5/unit. Find the wages paid in Hometo produce apples and bananas. Identify the good that Home should specialize in and why.
Suppose that in the UK 15 million cars could be produced with the same resources as 13 million airplanes. Suppose that in Poland 15 million cars could be produced with the same resources as 14 million airplanes. Which country has a lower opportunity cost in producing cars and why? In a one-factor economy, you have the following information: Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. Foreign, has a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1. Graph Home’s & Foreign production possibility frontier. Specify the maximum quantity that can be produced from both goods. Find the absolute value of the slope. Compare the opportunity cost of apples in Home and in Foreign. If apples are sold at $9/unit and bananas are sold at $5/unit. Find the wages paid in Hometo produce apples and bananas. Identify the good that Home should specialize in and why.
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 7SQ
Related questions
Question
- Suppose that in the UK 15 million cars could be produced with the same resources as 13 million airplanes. Suppose that in Poland 15 million cars could be produced with the same resources as 14 million airplanes. Which country has a lower
opportunity cost in producing cars and why?
- In a one-factor economy, you have the following information: Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. Foreign, has a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1.
- Graph Home’s & Foreign
production possibility frontier . Specify the maximum quantity that can be produced from both goods. Find the absolute value of the slope. - Compare the opportunity cost of apples in Home and in Foreign.
- If apples are sold at $9/unit and bananas are sold at $5/unit. Find the wages paid in Hometo produce apples and bananas.
- Identify the good that Home should specialize in and why.
- If you have the following information:
|
|
Unit labor requirement in Good 1 |
Unit labor requirement in Good 2 |
Wages |
|
Country A |
3 |
5 |
$ 30 /hour |
|
Country B |
6 |
1 |
$ 80 /hour |
Which country has a cost advantage in producing which good and why?
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