What are the limits of the terms of trade between Gamma and Sigma? Multiple Choice 1 tea = 2 pots to 1 tea = 6 pots 1 tea = 3 pots to 1 tea = 6 pots 1 tea = 2 pots to 1 tea = 3.5 pots 1 tea = 1 pot to 1 tea = 3 pots
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The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons.
Gamma's production possibilities
| A | B | C | D | E | |
| Tea | 120 | 90 | 60 | 30 | 0 |
| Pots | 0 | 30 | 60 | 90 | 120 |
Sigma's production possibilities
| A | B | C | D | E | |
| Tea | 40 | 30 | 20 | 10 | 0 |
| Pots | 0 | 30 | 60 | 90 | 120 |
What are the limits of the terms of trade between Gamma and Sigma?
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1 tea = 2 pots to 1 tea = 6 pots
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1 tea = 3 pots to 1 tea = 6 pots
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1 tea = 2 pots to 1 tea = 3.5 pots
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1 tea = 1 pot to 1 tea = 3 pots
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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?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?Answer the question on the basis of the following production possibilities data for Gamma and Sigma. All data are in tons. Gamma production possibilities: A B C D E Tea 120 90 60 30 0 Pots 0 30 60 90 120 Sigma production possibilities: A B C D E Tea 40 30 20 10 0 Pots 0 30 60 90 120 What are the limits of the terms of trade between Gamma and Sigma? 1 tea=2 pots to 1 tea=6 pots 1 tea=3 pots to 1 tea=6 pots 1 tea=2 pots to 1 tea=3.5 pots 1 tea=1 pot to 1 tea=3 pots
- The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities A B C D E Tea 120 90 60 30 0 Pots 0 30 60 90 120 Sigma's production possibilities A B C D E Tea 40 30 20 10 0 Pots 0 30 60 90 120 On the basis of this information, Question 3 options: Gamma should export both tea and pots to Sigma. Sigma should export tea to Gamma, and Gamma should export pots to Sigma. Gamma should export tea to Sigma, and Sigma should export pots to Gamma. Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots.Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. North Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 10 18 24 28 30 South Cantina Production Possibilities A B C D E F Capital Goods 5 4 3 2 1 0 Consumer Goods 0 8 15 21 25 27 Refer to the tables. If North Cantina is producing at production alternative A, the opportunity cost of the first unit of consumer goods will be Multiple Choice 1/5 of a unit of capital goods. 1 unit of capital goods. 5 units of capital goods. 1/10 of a unit of capital goods..The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities A B C D E Tea 120 90 60 30 0 Pots 0 30 60 90 120 Sigma's production possibilities A B C D E Tea 40 30 20 10 0 Pots 0 30 60 90 120 Assume that before specialization and trade, Gamma and Sigma both chose production possibility "C." Now if each specializes according to comparative advantage, the gains from specialization and trade will be Multiple Choice 40 tons of pots. 20 tons of tea and 20 tons of pots. 20 tons of tea. 40 tons of tea.
- If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation. Output (Units) Nations Aluminum Oil Quirk 20 40 Turk 30 90 Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations? Multiple Choice 0.5 unit of oil for 1 unit of aluminum 0.5 unit of oil for 2 units of aluminum 1 unit of oil for 0.4 unit of aluminum 1 unit of oil for 4 units of aluminumDraw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F. Option missiles butter A 0 30 B 1 28 C 2 24 D 3 18 E 4 10 F 5 0 Can this country produce 24 units of butter and 4 missiles? Explain. Where would this point lie on the PPF? What is the trade-off when moving from point A to B? What is the opportunity cost of increasing missile production from 3-4 units? what is the opportunity cost of increasing butter production from 18-24 units? What is the maximum amount of butter that can be produced, if all resources are devoted to butter production? Can this country produce 2 missiles and 10 units of butter? Yes or no? Where would this point lie relative…Wat's Production Possibilities Product A B C D E F Rice 750 600 450 300 150 0 Corn 0 50 100 150 200 250 Xat's Production Possibilities Product A B C D E F Rice 2,500 2,000 1,500 1,000 500 0 Corn 0 100 200 300 400 500 The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. The mutually beneficial terms of trade will be Multiple Choice less than 2 units of rice for 1 unit of corn. greater than 4 units of rice for 1 unit of corn. between 3 and 5 units of corn for 1 unit of rice. between 3 and 5 units of rice for 1 unit of corn.
- Grapes 200 Grapes 200 California 50 France 25 Tomatoes Tomatoes 4 Refer to the figure shown, which represents the production possibilities frontiers for California and France. Considering the production possibilities frontiers of both countries, we can infer that California should specialize in producing ........ and be willing to ......... five tomatoes for each grape.The trading possibilities for two nations, Portugal and Italy are given below. Assume that prior to specialization and trade Italy is at position C and Portugal is at position C. A B C D E F Italy Loaves 30 24 18 10 6 0 Fishes 0 6 12 18 24 30 A B C D E F Portugal Loaves 10 8 6 4 2 0 Fishes 0 4 8 12 18 20 Before specialization, the cost ratio, loaves per fishes in Italy isGermany Production Possibilities (Production Alternatives) Product A B C D E F Autos 0 4 8 12 16 20 Chemicals 40 32 24 16 8 0 U.S. Production Possibilities (Production Alternatives) Product A B C D E F Autos 0 3 6 9 12 15 Chemicals 60 48 36 24 12 0 The data in the accompanying production possibilities tables (in millions of units) suggest that production in Multiple Choice Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs. the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs. both Germany and the United States is subject to constant opportunity costs. both Germany and the United States is subject to increasing opportunity costs.
