Suppose there are two countries Peru and Japan that produces 7,523 units ofFood or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5,000. a) On two seperate graphs sketch the initial PFF for the two countries with Food on the x-axis. b) If Japan and Peru employ half it workers to produce Fuel how much each good can consume? Label this point A and A* respectively. c) Which country has the absolute advantage in food? In fuel? Explain.
Suppose there are two countries Peru and Japan that produces 7,523 units ofFood or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5,000. a) On two seperate graphs sketch the initial PFF for the two countries with Food on the x-axis. b) If Japan and Peru employ half it workers to produce Fuel how much each good can consume? Label this point A and A* respectively. c) Which country has the absolute advantage in food? In fuel? Explain.
Chapter21: International Trade And Finance
Section: Chapter Questions
Problem 2SQ
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Suppose there are two countries Peru and Japan that produces 7,523 units ofFood or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5,000.
a) On two seperate graphs sketch the initial PFF for the two countries with Food on the x-axis.
b) If Japan and Peru employ half it workers to produce Fuel how much each good can consume? Label this point A and A* respectively.
c) Which country has the
d) Which country has the
e) Which good(s) should each country specialized in?
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