MICROECONOMICS-MEDIA OPS ACCESS
20th Edition
ISBN: 9780077660826
Author: McConnell
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 10DQ
To determine
Total savings of goods due to imports.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Once again, consider Babs and Donna, who can each produce cake, beer, or some combination of
the two using only 40 hours of labor each. Babs can produce a maximum of 50 cakes if she
produces no beer, and 100 units of beer if she produces no cake. Donna can produce a maximum
of 100 cakes with no beer produced; if she makes no cake, she can produce 120 units of beer.
has the comparative advantage in cake production;
has the comparative
advantage in beer production.
O Donna; Donna
O Donna; Babs
O Babs; Babs
O Babs; Donna
MacBook Air
吕口
F3
D00
F4
F5
F6
II
F7
F8
$
&
*
4
5
7
8.
E
Y
U
F
G
H
J
K
6
part C and D needed only
Consider the Production Possibility Frontiers of two countries, Australia and Brazil. Assume both have linear PPFs and the two countries both produce the same two goods: fruits and grain.
Given its resources, Australia can produce either 2 units of grain per day or 1 unit of fruits; Brazil can produce either 5 units of grain or 4 units of fruits. (You may, for your own use, find it helpful to draw the Production Possibilities Frontiers for each country, though these won't be included in the answers you provide in you online responses.)
a. If there were no trade, what would be the local price of fruits in each country, measured in units of grain?
b. If trade is allowed, which country will export fruits and which country will export grain (if any)?
c. What are the gains from trading a unit of fruit if the international price of fruit is equal to the average of the local prices in the two countries?
d. How are the gains from trade distributed? Comment…
The production possibilities frontiers in the figure to the right show how many
bananas and coconuts you (Y) and your neighbor (N) can consume without trade
Suppose you are initially consuming 14 bananas and 3 coconuts and your
neighbor is initially consuming 3 bananas and 9 coconuts.
Now, suppose you and your neighbor specialize by each only producing the good
for which you have a comparative advantage
You give your neighbor half of your production for half of what he produces.
(Enter all responses as integers)
If you trade with your neighbor, then you will have additional coconut(s) after
the trade and additional banana(s)
At the same time, your neighbor will be able to consume additional banana(s)
and will be
as a result of trade.
Quantity of coconuts
26-
2.*.*.*.*.
Your PPF
12-
10-
Neighbor's PPF
6 8 10 12 14 16 18 20 22 24 26 28 30 32
Quantity of bananas
GOO
Chapter 1 Solutions
MICROECONOMICS-MEDIA OPS ACCESS
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Prob. 1ADQCh. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2ARQCh. 1.A - Prob. 1AP
Ch. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7APCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
Knowledge Booster
Similar questions
- Vega and Sentra are two countries that both produce chicken and vegetables. In Vega each worker in a one-hour period can produce either 9.05 pounds of chicken or 5.76 pounds of vegetables. In Sentra each worker in a one-hour period can produce either 25.49 pounds of chicken or 8.17 pounds of vegetables. Suppose both countries have constant opportunity cost of production and decide to specialize and exchange. The country that specializes in vegetables is willing to sell 19 pounds of vegetables for at least pounds of chicken. Enter a numerical value, rounded to two decimal places.arrow_forward12. Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9000 pizzas. Relate this information to the following statement: “Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus ‘move outside its production possibilities curve.arrow_forwardInitially, suppose Bellissima uses 1 million hours of labor per week to produce corn and 3 million hours per week to produce jeans, while Felicidad uses 3 million hours of labor per week to produce corn and 1 million hours per week to produce jeans. Consequently, Felicidad produces 15 million bushels of corn and 20 million pairs of jeans, and Bellissima produces 8 million bushels of corn and 48 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of corn and jeans it produces. What is Felicidad's oppunrtunity cost for 1 bushel of corn?arrow_forward
- P1. Let’s assume there are only 2 countries that produce 2 good. More specifically, suppose that the United States (US) and the United Kingdom (UK) each have 2 units of productive resources, 1 used to produce Wine, the other Cloth. The US can produce 40 units of Wine with 1 unit of productive resources and 40 units of Cloth with 1 unit of productive resources. The UK can produce 20 units of Wine with 1 unit of productive resources and 10 units of cloth with 1 unit of productive resources. Using this information, please answer the questions below: 1. What are the gains from trade? 2. What is the “range” of potential exchange rates between US and UK?arrow_forwardP1. Let’s assume there are only 2 countries that produce 2 good. More specifically, suppose that the United States (US) and the United Kingdom (UK) each have 2 units of productive resources, 1 used to produce Wine, the other Cloth. The US can produce 40 units of Wine with 1 unit of productive resources and 40 units of Cloth with 1 unit of productive resources. The UK can produce 20 units of Wine with 1 unit of productive resources and 10 units of cloth with 1 unit of productive resources. Using this information, please answer the questions below: *Who has an absolute advantage in the production of Wine? Cloth? *Who has a comparative advantage in the production of Wine? Cloth? *Given specialization, what is production before trade? After trade? *What are the gains from trade? *What is the “range” of potential exchange rates between US and UK? P2. Suppose that in Japan, without a tariff 10,000 cars will be sold per year at an equilibrium price of $20,000. With a $5,000 tariff,…arrow_forwardQ58 Suppose Spain is currently producing 90 units of wine and 10 units of cheese, but to produce 10 more units of cheese it must sacrifice 30 units of wine. Further, suppose that Portugal produces 45 units of wine and 45 units of cheese, but to produce 10 more units of cheese it must sacrifice only 10 units of wine. It can be concluded that... a. More information is needed to conclude anything about comparative advantage in either country. b. Portugal has an absolute advantage in wine production and Spain has an absolute advantage in cheese production. c. Spain has a comparative advantage in the production of wine and Portugal has a comparative advantage in the production of cheese. d. Spain has an absolute advantage in both wine and cheese production. e. Portugal has an absolute advantage in both wine and cheese production.arrow_forward
- Assume Bolivia and Chile use the same amount of resources to produce tin and copper. The following graphs represent their production possibilities curves. Bolivia Chile 12 10 10 8 4 4 2 4 6 8 10 12 14 4 6 8 10 12 14 16 Tons of copper Tons of copper Bolivia has a comparative advantage in the production of which metal? Bolivia has a comparative advantage in the production of (Click to select) Tons of tin Tons of tinarrow_forwardSuppose that in the country of England, two goods can be produced on available agricultural land: wine and wool. Suppose that the opportunity costs of production are constant, so that the PPF is a straight line. Further, when all resources are devoted to wine production, England can produce 200 (thousand) barrels. When all resources are devoted to wool production, England can produce 400 (thousand) bushels of wool. What are the opportunity costs in England of producing a barrel of wine? Type your numeric answer and submitarrow_forwardIn the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds? Use a production possibilities frontier to analyze opportunity costs and trade-offs. Hats (millions per year) 5 4 3 2 1 0 1 2 3 4 5 6 Bananas (millions of pounds per year) O 1/2 million hats 1 million hats O 2 million hats O 3 million hatsarrow_forward
- Assume that the world economy is composed of only two countries (Canada and the United States) and only two goods (steel and wheat). The table below reports the units of steel or wheat per unit of labor in Canada and in the United States Steel per Wheat per unit of labor unit of labor Canada United States 9. 3 Suppose both the US and Canada have 10 units of labor. Use the joint PPF to answer the following: If the two countries are producing 25 units of wheat, what is the opportunity cost of wheat? Hint: draw the PPF and ask what is the slope when 25 units are being produced? 2.5 2.75 3arrow_forward10)Suppose that in a three-hour block of time you can either make 2 batches of chocolate chip cookies or word-process 10 pages of text. In contrast, your roommate Keshawn can either make 4 batches of cookies or word-process 5 pages of text in a three-hour block of time. Which of the following is correct * a)Your comparative advantage is in making cookies. b)None of the above c)Keshawn's comparative advantage is in word-processing text. d)Your comparative advantage is in word-processing text.arrow_forwardAssume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. a) Graph both countries' PPF. Clearly state which trade theory you are using and explain the reason. Note that the shape of the production possibility frontier depends on the theory. b) Show relative autarky price in Germany and France country. c) Which country has a comparative advantage in the production of apple? Why?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you