1. One German worker can produce either 5 cars or 10 tons of grain a year. OneJapanese worker can produce either 4 cars or 5 tons of grain a year. To keep thingssimple, assume that each country has 100 million workers.a) Complete the following table with the number of workers needed to makeone car or one ton of grain in Germany and JapanWorkers Needed to make1 CarGermanyJapan1 Ton of Grainb) Graph the production possibilities frontier (PPF) for German economy aswell as the PPF for Japanese economy in the same graph. Carefully label andidentify the endpoint in your graphs.c)In Germany, what is the opportunity cost of producing a car? What is theopportunity cost of producing a ton of grain? Show your work.d)In Japan, what is the opportunity cost of producing a car? a ton of grain? Showyour work.e) Given all the information above, which country has an absolute advantage inproducing cars? Which country has an absolute advantage in producing grain.Why?f) Given all the information above, which country has a comparative advantagein producing cars? Which country has a comparative advantage in producinggrain? Why?g) Both countries will spend half of each country's workers produce cars and halfproduce grain. Complete the following table with the quantities of carsproduced and consumed in each country if there is no trade.Car Produced andConsumed (million)Tons of Grain Producedand Consumed (million)GermanyJapanh) If each country only produces the good in which they have a comparativeadvantage and then traded 300 million tons of grain for 200 million cars, willboth countries be better off? Why?

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1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Workers Needed to make 1 Car di Germany Japan 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs. c) In Germany, what is the opportunity cost of producing a car? What is the opportunity cost of producing a ton of grain? Show your work. In Japan what is the opportunity cost of producing a car? a ton of grain? Show

1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Workers Needed to make 1 Car di Germany Japan 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs. c) In Germany, what is the opportunity cost of producing a car? What is the opportunity cost of producing a ton of grain? Show your work. In Japan what is the opportunity cost of producing a car? a ton of grain? Show

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Workers Needed to make 1 Car Germany Japan 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs.
1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Workers Needed to make 1 Car Germany Japan 1/5 1/4 1/10 1/5 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs. c) Given all the information above, which country has an absolute advantage in producing cars? Which country has an absolute advantage in producing grain. Why?
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In a world where the only goods are cell phones and cereal: Jennereelam can produce: 80m kilos of cereal, and 200k cell phones, while Jonathannadu can produce: 30m kilos of cereal, and 15k cell phones. Even though Jennereelam is a bigger economy and can produce more of each product than Jonathannadu, this guy named Ricardo insists that they will both benefit if they trade. What is Ricardo's argument called, and why does he make the claim?
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