Question

- Canadian and Japanese workers can each produce 4 cars per year.
A Canadian worker can produce 10 tonnes of grain per year, whereas
a Japanese worker can produce 5 tonnes of grain per year. To keep
things simple, assume that each country has 100 million workers.
- Graph the production possibilities frontier of the Canadian and Japanese economies.
- For Canada, what is the opportunity cost of a car? Of grain? For Japan, what is the opportunity cost of a car? Of grain?
- Which country has an absolute advantage in producing cars? In producing grain?
- Which country has a comparative advantage in producing cars? In producing grain? (Ignore the circle)
- Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce?

Answer #1

Canadian and Japanese workers can
each produce 4 cars per year. A Canadian worker can produce 10
tonnes of grain per year, whereas a Japanese worker can produce 5
tonnes of grain per year. To keep things simple, assume that each
country has 100 million workers.
a. Starting from a position
without trade, give a numerical example in which trade makes each
country better off.
answer the part a

If there are only two countries and two goods in a highly
simplified world, America can
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whereas Japan can
produce at most 400 cars or at most 50 tons of grain per year.
a. Draw the linear production possibility frontier for the American
economy. (Please use
vertical axis to represent cars and use horizontal axis to
represent grain.)
b. Draw the linear production possibility frontiers for...

Suppose there are 10 million workers in Canada and that each of
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year. 1) Draw the Production Possibilities Frontier (PPF) for the
US, knowing that each US worker can produce either 2 cars or 28
bushels of wheat a year. There are 20 million workers in the US 2)
If the US wanted to consume an equal amount of both goods, what
quantity of each would...

Suppose there are 10 million workers in Canada and that each of
these workers can produce either 2 cars or 30 bushels of wheat in a
year. Draw Canada’s production possibilities frontier and show
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Consider two countries: The Netherlands and Germany. - Each
country can produce bicycles and cars by its resources. - If
Germany allocates all of its resources to car production, it can
produce 16 cars and hence no bicycles. And if Germany decides to
allocate all resources to produce bicycles, it can produce 8
bicycles and hence, no cars. - If the Netherlands allocates all of
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Brazil can produce 100 pounds of beef or 10 cars; in contrast,
the United States can produce 40 pounds of beef or 30 cars.
1- Draw the production possibility frontier for each country
with beef on the horizontal axis.
2- What is the opportunity cost of one unit of beef in
Brazil?
3- What is the opportunity cost of one car in Brazil?
4- What is the opportunity cost of one unit of beef in the
US?
5- What is...

Suppose that there are 7 million workers in Mexico and that each
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The opportunity cost of producing a car in Mexico is
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a bushel of wheat in Mexico is cars.

Suppose that in the United States 4 worker-hours are required to
produce each unit of clothing and each unit of food. In Canada, 1
worker-hour is required for each unit of clothing and 2 worker
hours are required for a unit of food. Show your work.
A. Assuming that each country has 40 worker-hours of labor
available for production, draw the production possibilities
frontiers for each country. What do the slopes of these frontiers
indicate? (Place Food on the Vertical...

4. Problems and Applications Q4
An economy consists of three workers: Carlos, Felix, and Larry.
Each works 10 hours a day and can produce two services: mowing
lawns and washing cars. In an hour, Carlos can either mow 1 lawn or
wash 1 car; Felix can either mow 1 lawn or wash 2 cars; and Larry
can either mow 2 lawns or wash 1 car.
For each of the scenarios listed in the following table,
determine how many lawns will...

England and Scotland both produce scones and sweaters. Suppose
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a. Which country has the absolute advantage in the production of
each good?
b. Find the opportunity cost of producing one sweater in terms
of scones for each country. In other words,...

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