Question

2. Country X has 100 units of labor. In country X it takes 10 units of...

2. Country X has 100 units of labor. In country X it takes 10 units of labor to produce an airplane and 5 units of labor to produce a unit (whatever it is....) of coffee beans. Country Y has 200 units of labor. In country Y it takes 10 units of labor to produce an airplane and it takes 2 units of labor to produce a unit of coffee. Who has a comparative advantage in airplanes? Draw the PPF for these two countries combined. Label the slopes and intercepts.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans: Country X has comparative advantage is airplanes.

Explanation:

The following table shows that different quanties of production of airplanes and coffee beans from their respective labor force.

For country X , the opportunnity cost of 1 unit of Airplane = 20 / 10 = 2 units of coffee beans

For country Y , the opportunnity cost of 1 unit of Airplane = 100 / 20 = 5 units of coffee beans.

A country has comparative advantage in the production of a good in which it has lower opportunity cost as compared to other country.

Airplane

( Units)

Coffee beans

(Units)
Country X 10 20
Country Y 20 100

Ans: PPF of these two countries are shown in the following figure.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Imagine that you work for the central bureaucracy and you need to raise revenue. You...
1. Imagine that you work for the central bureaucracy and you need to raise revenue. You want to use a per-unit tax on some good. There are two possible goods. The current equilibrium price and quantity are the same for both goods. However, for good A, both the supply and demand are more elastic than for good B. The tax will be $1/unit regardless of which good you choose to tax. Which good will give you more revenue? Which one...
In a two-good Ricardian economy, the Home country has 100 units of labor with labor productivity...
In a two-good Ricardian economy, the Home country has 100 units of labor with labor productivity equal to 2 (i.e., each worker can produce 2 units of each good) and the Foreign has 200 units of labor with labor productivity equal to 1 (i.e., each worker can produce 1 unit of each good). Which of the following statements is necessarily true? Home is labor-abundant. Foreign is labor-abundant. Home and Foreign have the same production possibility frontier (PPF). Home's PPF is...
Consider a Ricardian environment. Two countries (A and B) make two goods (X and Y). Country...
Consider a Ricardian environment. Two countries (A and B) make two goods (X and Y). Country A has 60 units of labor and country B has 120 units of labor. The unit labor requirements are as follows: X Y Country A 1 2 Country B 2 3 a. Draw the PPF for each country b. Calculate the autarky prices for each country (Px/Py) c. Which country has an absolute advantage in good X? Good Y? Which has a comparative advantage...
1. You have the following information concerning the production of wheat and cloth in the U.S....
1. You have the following information concerning the production of wheat and cloth in the U.S. and England: Labor hours required to produce 1 unit: England U.S. Wheat 2 1 Cloth 6 5 a) What is the opportunity cost of producing a unit of wheat in England? In the U.S.? [HINT: Your answer must be in the form of units of the other good given up, e.g. “the opportunity cost of 1 more unit of wheat is 7 units of...
A country has 100 units of labor (L) and production functions x = (Lx)^0.5 and y...
A country has 100 units of labor (L) and production functions x = (Lx)^0.5 and y = 4Ly, where Lx and Ly describe the labor allocation. When the country divides its labor equally between producing x & y, what is the rate of product transformation (slope) for the PPF? a. 49.3 b. 56.7 c. 61.1 d. 71.0
Ricardian Model Suppose US (N) and Mexico (S) both can produce soccer balls (SB) and footballs...
Ricardian Model Suppose US (N) and Mexico (S) both can produce soccer balls (SB) and footballs (FB). The unit labor requirements for soccer balls and footballs in the US and Mexico are: a N SB = 10; a N FB = 2; a S SB = 10; a S FB = 10 • Which country has the absolute advantage in producing football? Which country has the comparative advantage in producing football? • Us the law of Comparative Advantage to predict...
Country A has 25,000 units of labor and can produce 2 goods, manufactures and food. A’s...
Country A has 25,000 units of labor and can produce 2 goods, manufactures and food. A’s producers take 5 units of labor to produce one unit of manufactures and 1 unit of labor to produce one unit of food. Country B has 33000 units of labor and takes 3 units to produce one unit of manufactures and 2 units to produce one unit of food. What is price of manufactures in terms of food at which A and B would...
Suppose there are two countries, USA and Japan. USA is regarded as the home country and...
Suppose there are two countries, USA and Japan. USA is regarded as the home country and Japan is the foreign country. USA has 100 units of labor available and Japan has 80 units of labor. Both countries can produce only two goods, airplanes and cars. The output per hour of labor in the production of airplanes in the USA is 12, while in car production the output per hour of labor is 6. In Japan, the output per hour of...
On an island economy, Juanita has 50 units of labor, and can produce x using x...
On an island economy, Juanita has 50 units of labor, and can produce x using x = 0.25Lx, and y using y = 10(Ly)0.5, where Lx and Ly are labor for sectors x and y. The equation of the PPF is ____, and if Juanita only likes to consume y, she will produce y = ____. 4x + y2/100 = 50; 104 4x + y2/100; 70.7 2y2 + 4x = 120; 104 Y2 + 12x = 50; 70.7
If with one unit of labor the U.S. can produce 20 units of computer software and...
If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of computer hardware and China can produce 5 units of software and 5 units of hardware then Select one: A. the United States has a comparative and absolute advantage in both goods. B. the United States has a comparative advantage in both goods. C. China has a comparative advantage in hardware and the U.S. has a comparative advantage in software. D. China...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT