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- 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?Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producingautos?WhatistheopportunitycostofproducingonepoundofbeefinBrazil?Whatistheopportunitycost of producing one pound of beef in the United States?In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. a. Who has the absolute advantage in the production of rubber or radios? How can you tell? b. Calculate the opportunity cost of producing 80 additionalradiosinJapanandinMalaysia.(Your calculationmayinvolvefractions,whichisfine.) Which country has a comparative advantage in the production of radios? c. Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? d. In this example, does each country have an absoluteadvantageandacomparativeadvantage in the same good? e. InwhatproductshouldJapanspecialize?Inwhat product should Malaysia specialize?
- Assume each country's potential output per unit worker per month is given below. (answer questions 15-18 based on the following information) Corn (lb) Scarves(#)U.S. 20 10Mexico 25 5Which country has an absolute advantage in producing corn and scarves respectively a. U.S. in corn; Mexico in scarves b. U.S. in scarves; Mexico in corn c. Mexico in corn; Mexico in scarves d. U.S. in corn; U.S. in scarvesBrazil Mexico Soya per unit of labor 0.05 0.02 Corn per unit of labor 1.25 1.40 Which country has absolute advantage in growing corn? Which country should specialize in producing and exporting soya?Production Per Unit of Labor United States China Computers 150 100 Shoes 200 400 Does either country have the absolute advantage in production of Shoes or Computers? Explain?
- Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food 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 5000. (c) Which country has the absolute advantage in food? In fuel? Explain. (d) Which country has the comparative advantage in food? In fuel? Explain. (e) Which good(s) should each country specialize in?Production Advantage and Opportunity CostsAssume there are two countries, the United States and France, and two goods, automobiles andcomputers.The table presented below shows the number of automobiles and computers that the United States andFrance can produce with the same amount of resources.United States FranceAutomobiles 120 100Computers 60 55Source: Pearson Education Inc. 1.1 Which country has an absolute advantage in computer production? Motivate your answer.1.2 Which country has a comparative advantage in the production of automobiles? Motivateyour answer. 1.3 Assume these countries trade with one another under the conditions of free trade. Whichcountry will specialise in the production of automobiles? Motivate your answer. 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and France.why countries trade goods and services, and why such trade can increasewelfare.
- .Brazil can produce 100 pounds of beef or 10 autos; in contrast the United States can produce 40pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has theabsolute advantage in producing autos? What is the opportunity cost of producing one pound of beef inBrazil? What is the opportunity cost of producing one pound of beef in the United States?In the United States, one worker can produce 10 tons of steel per day or 20 tons of chemicals per day. In the United Kingdom, one worker can produce 5 tons of steel per day or 15 tons of chemicals per day. Show by way of calculations: a) The United States has absolute advantage in the production of? b) The United Kingdom has a comparative in the production of? c) If trade occurs between the United States and the United Kingdom, American firms will specialize in the production of?Absolute and comparative advantage Consider two neighboring island countries, Botoga and Doporia. Each has 900,000 labor hours available per week that it can use to produce wheat, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of wheat or 1 pair of jeans. Wheat Jeans Country (Labor hours per bushel) (Labor hours per pair) Botoga 40 10 Doporia 36 6 _______ (Botoga / Neither / Doporia) has an absolute advantage in the production of wheat, and ______ (Botoga / Neither / Doporia) has an absolute advantage in the production of jeans. Initially, suppose Botoga uses 225,000 hours of labor per week to produce wheat and 675,000 hours per week to produce jeans, while Doporia uses 675,000 hours of labor per week to produce wheat and 225,000 hours per week to produce jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries,…
