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- Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 61 units of pretzels or 14 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.34 units of cars for one unit of pretzel. For every 5050 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. Labor Hours Number of Units Needed to Make Produced in 24 1 Unit of Hours Cheese Bread Cheese Bread England2 Spain 3 3 12 8 8 4 Which of the following statement is correct? England has the comparative advantage in Cheese Spain has the comparative advantage in Cheese England has the comparative advantage in both Cheese and Bread Spain has the comparative advantage in both Cheese and BreadBelow are graphs for Ireland and Japan, showing their PPC and CPC curves for two products. Assume there is initially autarky. 1234 5 67 8 4 5 678 Units of Steel Units of Steel Ireland Japan Note that the units of wool are in millions of bushels and the units of steel are in millions of tonnes. Using above information and graphs, complete the below statements, filling in your final, complete answer in the space/box provided to the right of the statement. Do not show your work/calculations. Units ef Weol 5. U'nits of Wool 1.
- In Country T, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice. In Country Y, it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice. Country T has a comparative advantage over Country Y in cocoa. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it; however, this conclusion stems from which of these inaccurate assumptions? Multiple Choice We have assumed constant returns to scale. We have assumed the prices of resources and exchange rates in the two countries are dynamic. We have assumed there are barriers to the movement of resources from the production of one good to another within the same country. We have assumed that agrarian nations do not specialize in producing particular products. We have assumed diminishing returns to specialization.In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked “Trade Action,” and enter each country's final consumption of each good on the line marked “Consumption.” When the two countries did not specialize, the total production of jeans was 36 million pairs per week, and the total production of corn was 104 million bushels per week. Because of specialization, the total production of jeans has increased by ______________million pairs per week, and the total production of corn has increased by ______________million bushels per week. Because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade. Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked “Increase in…Assume Bolivia and Chile use the same amount of resources to produce tin and copper. The following graphs represent their production possibilities curves. Bolivia Chile 12 10 10 8. 8. 6. 4 2 4 6. 8. 10 12 14 2 4 6. 8. 10 12 14 16 Tons of copper Tons of copper Chile has a comparative advantage in the production of which metal? Chile has a comparative advantage in the production of (Click to select) v Tons of tin Tons of tin
- Consider two neighboring island countries called Felicidad and Bellissima. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Felicidad 4. 16 Bellissima 12 Initially, suppose Bellissima uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce corn, while Felicidad uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce corn. Consequently, Felicidad produces 12 million pairs of jeans and 16 million bushels of corn, and Bellissima produces 6 million pairs of jeans and 36 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn it…3. Gains from trade Consider two neighboring island countries called Contente and Euphoria. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 16 Euphoria 20 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 8 million pairs of jeans and 48 million bushels of corn, and Euphoria produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn…20 18 16 14 12 10 g 6 2 Chile's Production Possibilities Frontier soybeans (in pound) 2 4 L Chile: S= and C= 5 L L Colombia: S=- and C= 2 S Chile: S= and C= 4 L 10 12 14 16 18 20 comme (in pound) Assume Chile and Colombia both have 48 labor hours available. Which of the following of production functions would yield each countries' PPF? S S 4 8 Chile: S= and C= L L Colombia: S= and C= 3 L and C C 6 L C 3 L 4 L C 4 L Colombia's Production Possibilities Frontier soybeans (in pound) C 20 18 16+ H+ 12 10 8 6 2 4 6 % 12 14 16 18 20 co (in pounds)
- “In what way does an understanding of the shifts in the PPC help businesses/countries make production decisions?” Rubric: ensure the importance of absolute and comparative advantage is made clear.Consider two neighboring island countries called Bellissima and Dolorium. They each have 4 million labor hours available per month that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Jeans Rye Country (Pairs per hour of labor) (Bushels per hour of labor) Bellissima 10 Dolorium 4 16 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Bellissima produces 5 million pairs of jeans and 30 million bushels of rye, and Dolorium produces 12 million pairs of jeans and 16 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.…If the United States produces 8 automobiles and Canada produces 4 automobiles and the United States produces 8 units of lumber and Canada produces 2 units of lumber, which country has comparative advantage,if any, in producing automobiles?