Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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The table below shows the number of labor minutes it takes for each employee to produce one pizza and one salad. Compare all 3 employees to one another and determine which one of the following statements is true?
Select one:
a. Carter has a comparative advantage in making Salad
b. Carter has an absolute advantage in both products
c. Melanie has a comparative advantage in making Pizza
d. Jackson has a comparative advantage in making Salad
e. Melanie has a comparative advantage in making Salad
f. Jackson has an absolute advantage in both products
g. Carter has a comparative advantage in making Pizza
The following table describes the number of yards of cloth and barrels of wine that can be produced with a week’s worth of labor in England and Portugal. Assume that no other inputs are needed.
In England In Portugal
Cloth 8 yards 12 yards
Wine 2 barrels 6 barrels
If there is no trade, what is the price of wine in terms of cloth in England?
If there is no trade, what is the price of wine in terms of cloth in Portugal?
Suppose each country has 1 million weeks of labor available per year. Draw the production possibilities frontier for each country.
Which country has an absolute advantage in the production of which good(s)? Which country has a comparative advantage in the production of which good(s)?
If the countries start…
Suppose there exist two imaginary countries, Congaree and Yosemite. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor.
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- The following table describes the number of yards of cloth and barrels of wine that can be produced with a week’s worth of labor in England and Portugal. Assume that no other inputs are needed. In England In Portugal Cloth 8 yards 12 yards Wine 2 barrels 6 barrels d.Which country has an absolute advantage in the production of which good(s)? Which country has a comparative advantage in the production of which good(s)? e.If the countries start trading with each other, which country will specialize and export which good? f.What can be said about the price at which trade will take place?arrow_forwardGains from trade Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Country Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) Bellissima 8 16 Felicidad 5 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Bellissima produces 8 million pairs of jeans and 48 million bushels of corn, and Felicidad produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each…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
- Suppose there exist two imaginary countries, Denali and Congaree. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Country Almonds Shorts (Pounds per hour of labor) (Pairs per hour of labor) Denali 6 12 Congaree 4 16 Suppose that initially Denali uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Congaree uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Denali produces 6 million pounds of almonds and 36 million pairs of shorts, and Congaree produces 12 million pounds of almonds and 16 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries,…arrow_forwardConsider two neighboring island countries called Arcadia and Dolorium. They each have 4 million labor hours available per month that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Country Jeans Rye Arcadia 8 16 Dolorium 5 20 Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Arcadia produces 8 million pairs of jeans and 48 million bushels of rye, and Dolorium produces 15 million pairs of jeans and 20 million bushels of rye. 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 jeans and rye it produces. Arcadia's opportunity cost of producing 1…arrow_forwardSuppose there exist two imaginary countries, Everglades and Denali. Their labor forces are each capable of supplying four million hours per day that can be used to produce shorts, almonds, or some combination of the two. The following table shows the amount of shorts or almonds that can be produced by one hour of labor. Country Shorts Almonds (Pairs per hour of labor) (Pounds per hour of labor) Everglades 4 16 Denali 6 12 Suppose that initially Denali uses 1 million hours of labor per day to produce shorts and 3 million hours per day to produce almonds, while Everglades uses 3 million hours of labor per day to produce shorts and 1 million hours per day to produce almonds. As a result, Everglades produces 12 million pairs of shorts and 16 million pounds of almonds, and Denali produces 6 million pairs of shorts and 36 million pounds of almonds. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two…arrow_forward
- Consider two neighboring island countries called Dolorium and Bellissima. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye (Bushels per hour of labor) Jeans (Pairs per hour of labor) Dolorium 8 32 Bellissima 12 24 Initially, suppose Bellissima uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Dolorium uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Dolorium produces 24 million bushels of rye and 32 million pairs of jeans, and Bellissima produces 12 million bushels of rye and 72 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 rye…arrow_forwardConsider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Dolorium 5 20 Contente 8 16 Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Dolorium uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Dolorium produces 15 million bushels of rye and 20 million pairs of jeans, and Contente produces 8 million bushels of rye 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 rye and jeans…arrow_forwardSuppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while Oatland will produce and consume 20 bushels of corn and 800 bushels of oats. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase byarrow_forward
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