Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (6th Edition)
6th Edition
ISBN: 9780134304755
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 2, Problem 2.2.4PA
Subpart (a):
To determine
US and Canada
Subpart (b):
To determine
Absolute advantage.
Subpart (c):
To determine
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Debra can make either 12 cakes or 16 cookies in 4 hours. Sam can make either 6 cakes or 12 cookies in 4 hours.
a. Who has an absolute advantage at producing cakes and who has an absolute advantage at producing cookies? Briefly explain your answers.
b. State Debra’s and Sam’s opportunity costs of producing one cake and one cookie. Draw and place your answer in a table which looks something like this:
Cake Cookie
Debra Sam
c. If both Debra and Sam concentrate on producing only the product in which they have a comparative advantage, how many cakes and how many cookies will they produce?
Debra can make either 12 cakes or 16 cookies in 4 hours.Sam can make either 6 cakes or 12 cookies in 4 hours.
a) who has an absolute advantage at producing cakes and who has an absolute advantage at producing cookies? Briefly explain your answer.
b) if Debra and Sam concentrate on producing only the product in which they have a comparative advantage, how many cakes and how many cookies will they produce?
c) state debra's and Sam's opportunity costs of producing one cake and one cookie. Draw and place your answer in a table which looks something like this:
Cake. Cookie
Debra
sam
What is the difference between absolute advantage and comparative advantage? If a country has an absolute advantage in producing a good, will it always be an exporter of that good? Briefly explain.
Chapter 2 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (6th Edition)
Ch. 2 - Prob. 1TCCh. 2 - Prob. 2TCCh. 2 - Prob. 2.1.1RQCh. 2 - Prob. 2.1.2RQCh. 2 - Prob. 2.1.3RQCh. 2 - Prob. 2.1.4PACh. 2 - Prob. 2.1.5PACh. 2 - Prob. 2.1.6PACh. 2 - Prob. 2.1.7PACh. 2 - Prob. 2.1.8PA
Ch. 2 - Prob. 2.1.9PACh. 2 - Prob. 2.1.10PACh. 2 - Prob. 2.1.11PACh. 2 - Prob. 2.1.12PACh. 2 - Prob. 2.1.13PACh. 2 - Prob. 2.1.14PACh. 2 - Prob. 2.2.1RQCh. 2 - Prob. 2.2.2RQCh. 2 - Prob. 2.2.3PACh. 2 - Prob. 2.2.4PACh. 2 - Prob. 2.2.5PACh. 2 - Prob. 2.2.6PACh. 2 - Prob. 2.2.7PACh. 2 - Prob. 2.2.8PACh. 2 - Prob. 2.2.9PACh. 2 - Prob. 2.2.10PACh. 2 - Prob. 2.2.11PACh. 2 - Prob. 2.2.12PACh. 2 - Prob. 2.2.13PACh. 2 - Prob. 2.2.14PACh. 2 - Prob. 2.2.15PACh. 2 - Prob. 2.3.1RQCh. 2 - Prob. 2.3.2RQCh. 2 - Prob. 2.3.3RQCh. 2 - Prob. 2.3.4RQCh. 2 - Prob. 2.3.5RQCh. 2 - Prob. 2.3.6RQCh. 2 - Prob. 2.3.7PACh. 2 - Prob. 2.3.8PACh. 2 - Prob. 2.3.9PACh. 2 - Prob. 2.3.10PACh. 2 - Prob. 2.3.11PACh. 2 - Prob. 2.3.12PACh. 2 - Prob. 2.3.13PACh. 2 - Prob. 2.3.14PACh. 2 - Prob. 2.3.15PACh. 2 - Prob. 2.3.16PA
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- Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following question: Who has absolute advantage in the production of hamburgers and who has absolute advantage in the production of pancakes?arrow_forwardConsider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following question: Who has comparative advantage in the production of hamburgers and who has comparative advantage in the production of pancakes?arrow_forwardAn average worker in Brazil can produce an ounce of soybeans in 20 minutes and an ounce of coffee in 60 minutes, while an average worker in Peru can produce an ounce of soybeans in 50 minutes and an ounce of coffee in 75 minutes. Who has the absolute advantage in coffee? Explain. Who has the comparative advantage in coffee? Explain. If the two countries specialize and trade with each other, who will import coffee? Explain. Assume that the two countries trade and that the country importing coffee trades 2 ounces of soybeans for 1 ounce of coffee. Explain why both countries will benefit from this trade.arrow_forward
- The following table describes the production possibilities of two cities in the country of Baseballia: Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour Boston 3 3 Chicago 2 1 Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago? Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? If the cities trade with each other, which color sock will each export? What is the range of prices at which mutually beneficial trade can occur?arrow_forward1. The following table shows the production of cows’ milk and potatoes per unit of input in the hypothetical countries of St. Claire and St. Paul. Use the following table to answer the questions. St. Claire St. Paul Cow’s Milk 100 liters 50 liters Potatoes 150 liters 60 kilos a) Which country has the absolute advantage in the production of cows’ milk? b) Which country has the absolute advantage in the production of potatoes? c) What is the opportunity cost of producing one liter of cows’ milk in St. Claire?arrow_forwardSuppose that Portugal and Germany both produce jeans and wine. Portugal's opportunity cost of producing a bottle of wine is 5 pairs of jeans while Germany's opportunity cost of producing a bottle of wine is 11 pairs of jeans. By comparing the opportunity cost of producing wine in the two countries, you can tell that (GERMANY OR PORTUGAL) has a comparative advantage in the production of wine and (GERMANY OR PORTUGAL) has a comparative advantage in the production of jeans. Suppose that Portugal and Germany consider trading wine and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than (1, 1/11, 1/5, 5 OR 11) of jeans for each bottle of wine it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than (1, 1/11, 1/5, 5 OR 11) of wine for each pair of jeans it exports to Portugal. Based on your answer to the last question, which of the following prices of trade (that is, price…arrow_forward
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