EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 38.2, Problem 2QQ
To determine
Opportunity Cost .
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Suppose there are two countries Peru and Japan that produces 7,523 units ofFood 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 5,000.
d) Which country has the comparative advantage in food? In fuel? Explain.
e) Which good(s) should each country specialized in?
Using the numbers in the table, determine which country has a comparative advantage in producing each product.
Output per Hour of Work
Switzerland
Canada
Smartphones
8
5
Which of the following statements is true?
A. The opportunity cost for Canada to produce one Smartphone is 0.60 Fitness Bracelet.
B. The opportunity cost for Switzerland to produce one Fitness Bracelet is 1.25 Smartphones.
OC. The opportunity cost for Switzerland to produce one Smartphone is 0.80 Fitness Bracelet.
OD. The opportunity for Canada to produce one Smartphone is 1.67 Fitness Bracelets.
Fitness Bracelets
10
3
Argentina and Brazil are considering the potential gains of trade. There is only one factor of production: labor. There
are only two goods being produced in either economy: coffee and wine. Argentina can employ 10,000 hours of labor
per month. Producing 1 lb. of coffee requires 2 hours of labor, and producing 1 bottle of wine requires 4 hours of
labor, in Argentina.
Similarly, Brazil can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 1 hour of labor, and
producing 1 bottle of wine requires 5 hours of labor, in Brazil.
Chapter 38 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 38.2 - Prob. 1QQCh. 38.2 - Prob. 2QQCh. 38.2 - Prob. 3QQCh. 38.2 - Prob. 4QQCh. 38 - Prob. 1DQCh. 38 - Prob. 2DQCh. 38 - Prob. 3DQCh. 38 - Prob. 4DQCh. 38 - Prob. 5DQCh. 38 - Prob. 6DQ
Ch. 38 - Prob. 7DQCh. 38 - Prob. 8DQCh. 38 - Prob. 9DQCh. 38 - Prob. 10DQCh. 38 - Prob. 11DQCh. 38 - Prob. 12DQCh. 38 - Prob. 13DQCh. 38 - Prob. 14DQCh. 38 - Prob. 1RQCh. 38 - Prob. 2RQCh. 38 - Prob. 3RQCh. 38 - Prob. 4RQCh. 38 - Prob. 5RQCh. 38 - Prob. 6RQCh. 38 - Prob. 7RQCh. 38 - Prob. 8RQCh. 38 - Prob. 9RQCh. 38 - Prob. 10RQCh. 38 - Prob. 11RQCh. 38 - Prob. 12RQCh. 38 - Prob. 13RQCh. 38 - Prob. 1PCh. 38 - Prob. 2PCh. 38 - Prob. 3PCh. 38 - Prob. 4P
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- Exercise: production per unit of labour: US: Wheat 300, Beef 100 Argentina: Wheat 20, Beef 20 a. Does either country have an absolute advantage in the production of wheat or beef? Explain b. What is the opportunity cost of wheat in each country? c. What is the opportunity cost of beef in each country? d. Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.arrow_forward1. 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. a) Which country has the comparative advantage in food? In fuel? Explain. b) Which good(s) should each country specialize in? c) Discuss the benefits of specialization for each country.arrow_forwardMicrochips 90 U.S. PPF Which country has comparative advantage in the production of Microchips? Which country has comparative advantage in the production of Brooms? Which country has absolute advantage in the production of Microchips? Which country has absolute advantage in the production of Brooms? Microchips Brooms [Choose ] [Choose ] [Choose ] [Choose ] 10 MEXICO PPF Broomsarrow_forward
- A typical Australian farmer can produce 8000 lbs of wheat or 500 lbs of potatoes per year. A typical Canadian farmer can produce 5000 lbs of wheat or 400 lbs of potatoes per year. Who has the comparative advantage in producing potatoes? a. Canada b. Australia explain!!!arrow_forward1. Determine which country has a comparative advantage in each good. 2. If Country A and Country B each have 100 units of labour, calculate the maximum production of each good for both countries. 3. In the absence of trade, Country B uses 20% of its total labour units to produce steel and the rest to produce oil. Country A uses 60% of its total labour units to produce steel and the rest to produce oil. Calculate how many tonnes of steel and oil can be produced by both countries. 4. Both countries agree that one tonne of steel can be exchanged for one tonne of oil. Calculate the gains after trade is allowed if Country A consumes 30 tonnes of oil domestically.arrow_forwardThe primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is? a.an expansion in investment resulting from a reallocation of resources away from consumption. b.an increase in the profitability of business enterprises resulting from an increase in investment. c.greater equality of income resulting from an increase in the number of workers. d.a larger output resulting from a more efficient use of resources.arrow_forward
- New Zealand in one year can raise 75 tons of beef or produce 750 boxes of tulips. In the same growing season, Belgium can raise 40 tons of beef or produce 650 boxes of tulips. From this information, we know that: A) New Zealand has a comparative advantage in raising beef. B) New Zealand has a comparative advantage in raising tulips. C) Belgium has a comparative advantage in raising beef. O D) Belgium has an absolute advantage in raising beef.arrow_forwardPlease use the following table to select the right choice. Country England Portugal Hours of work necessary to produce one unit Cloth Wine 100 120 90 80 England has absolute advantage in producing cloth. O England has no comparative advantage in either of the products. England has comparative advantage in producing cloth. Portugal has no comparative advantage in either of the products.arrow_forwardWhat is the opportunity cost of increasing the production of wheat and moving from point C to point B? Tons of Wheat 100 90 75 15 25 0 30 tons of wheat 5 tons of steel 80 tons of steel 45 tons of wheat A 20 Tons of Steel 75 80 90 100arrow_forward
- True or False: Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. Don't use Aiarrow_forwardQuestion: How much more coffee does Todd gain from specialization and trade? To answer this question, use must use the information below: Production and Consumption Both Todd and John will have 12 hours to produce. Todd will use 8 hours to produce 80 pounds of chocolate and 4 hours to produce 80 pounds of coffee. John will use 4 hours to produce 80 pounds of chocolate, and 8 hours to produce 80 pounds of coffee. Specialization and Trade Todd's production without Trade Using 4 hours as a the time element - Todd can produce 40 pounds of chocolate and 80 pounds of coffee. opportunity cost for chocolate is 80/40 = 2 opportunity cost for coffee is 40/80 = 1/2 John's production without Trade Using 4 hours as the time element - John can produce 80 pounds of chocolate and 40 pounds of coffee. opportunity cost for chocolate 40/80 = 1/2 opportunity cost for coffee is 80/20 = 2 Without Trade Totals - John and Todd produce 120 pounds of chocolate, and 120 pounds of coffee. Who Should Produce and…arrow_forwardQuestion: How much more coffee does Todd gain from specialization and trade? To answer this question, use must use the information below: Production and Consumption Both Todd and John will have 12 hours to produce. Todd will use 8 hours to produce 80 pounds of chocolate and 4 hours to produce 80 pounds of coffee. John will use 4 hours to produce 80 pounds of chocolate, and 8 hours to produce 80 pounds of coffee. Specialization and Trade Todd's production without Trade Using 4 hours as a the time element - Todd can produce 40 pounds of chocolate and 80 pounds of coffee. opportunity cost for chocolate is 80/40 = 2 opportunity cost for coffee is 40/80 = 1/2 John's production without Trade Using 4 hours as the time element - John can produce 80 pounds of chocolate and 40 pounds of coffee. opportunity cost for chocolate 40/80 = 1/2 opportunity cost for coffee is 80/20 = 2 Without Trade Totals - John and Todd produce 120 pounds of chocolate, and 120 pounds of coffee. Who Should Produce and…arrow_forward
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