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- Production Advantage and Opportunity CostsAssume there are two countries, the United States and France, and two goods, automobiles andcomputers.The table presented below shows the number of automobiles and computers that the United States andFrance can produce with the same amount of resources.United States FranceAutomobiles 120 100Computers 60 55Source: Pearson Education Inc. 1.1 Which country has an absolute advantage in computer production? Motivate your answer.1.2 Which country has a comparative advantage in the production of automobiles? Motivateyour answer. 1.3 Assume these countries trade with one another under the conditions of free trade. Whichcountry will specialise in the production of automobiles? Motivate your answer. 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and France.Suppose that in a day a worker in the United States can produce 10 bushels of corn or 2 shirts. In Russia a worker can produce 9 bushels of corn or 3 shirts in one day. Which of the following would benefit both the United States and Russia if trade occurred? 1 shirt for 6 bushels of corn -----1 shirt for 4 bushels of corn 1 shirt for 1 bushel of corn 1 shirt for 2 bushels of corn Im doing review for a class and I realize that 1 shirt and for bushels are the correct answer I am just confused on what formula would apply to figue this outTo determineThe ability of a country to produce a commodity with fewer resources.
- Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producingautos?WhatistheopportunitycostofproducingonepoundofbeefinBrazil?Whatistheopportunitycost of producing one pound of beef in the United States?The countries of Nickeltown and Lykesville each produce two goods: Ovens and Dishwashers. The table below lists the production for each good, for each country per year when each country uses half of their resources to produce each good. Country Production of Ovens Production of Dishwashers Nickeltown 105 Lykesville 147 What is the opportunity cost of producing 1 Ovens in Nickeltown Dishwashers 70 42 What is the opportunity cost of producing 1 Ovens in Lykesville Dishwashers ONickeltown OLykesville ONot enough information Which country has a comparative advantage in producing Ovens?With its existing resources Country A can produce either 500 million bushels of wheat or 40 million cars. They are presently not engaged in trade and are choosing to produce and consume 375 million bushels of wheat and 10 million cars. The country decides to completely specialize in wheat production. They trade 100 million bushels of wheat in exchange for 12 million cars. After trade they can consume million more bushels of wheat and million more cars than they could before trade?
- .Brazil can produce 100 pounds of beef or 10 autos; in contrast the United States can produce 40pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has theabsolute advantage in producing autos? What is the opportunity cost of producing one pound of beef inBrazil? What is the opportunity cost of producing one pound of beef in the United States?Argentina can produce 150 pounds of beef or 20 cars; in contrast the United States can produce 90 pounds of beef or 80 cars. Which country has the absolute advantage in producing beef? O Both countries have an absolute advantage. O United States O Argentina O Neither country has an absolute advantage.scenario Production Advantage and Opportunity CostsAssume there are two countries, the United States and France, and two goods, automobiles andcomputers.The table presented below shows the number of automobiles and computers that the United States andFrance can produce with the same amount of resources.United States FranceAutomobiles 120 100Computers 60 55Source: Pearson Education Inc. 1.1 Which country has an absolute advantage in computer production? Motivate your answer.1.2 Which country has a comparative advantage in the production of automobiles? Motivateyour answer. 1.3 Assume these countries trade with one another under the conditions of free trade. Whichcountry will specialise in the production of automobiles? Motivate your answer. 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and France.
- Two countries, Korea and Vietnam, are engaging in international trade.They produce two goods: automobiles and cloth. We observe a relativeabundance of cheap labor in Vietnam and a relative abundance of capitalin South Korea. a. Assume that automobiles are capital-intensive and cloth are cheaplabor-intensive. Using the Hecksher-Ohlin theory, explain what willhappen in trade between these two countries, in terms of export andimport. c. Draw a graph that shows the above situation in South Korean economy with a P P F and two relative prices (one before trade and theother after trade). The quantity of automobiles (QAuto) is on thehorizontal axis and the quantity of cloth (QCloth) is on the verticalaxis.If all countries follow a policy of free trade, economists predict that O a. each country will export goods at which it has a comparative advantage at producing and import goods at which it has a comparative disadvantage at producing Ob each country will export goods at which it has a comparative disadvantage at producing and import goods at which it has a comparative advantage at producing Oc there will be no trade between countries - that is, no international trade taking place Od rich countries will be made poorer by trade with poor countries O e. poor countries will be made even poorer by trade with rich countriesTable 3. This table provides Production Possibility Frontier information for England and France. Country England France Good W 10 20 Good Z 15 40 Refer to Table 3. Which of the following statements is true? England has an absolute advantage with respect to both goods. England has an absolute advantage with respect to Good W and France has an absolute advantage with respect to Good Z. France has an absolute advantage with respect to both goods. England has an absolute advantage with respect to Good Z and France has an absolute advantage with respect to Good W.