Suppose Japan and Great Britain produce only cell phones and digital music players. Assume that each country usesonly labor to produce each good, and that the cell phones and digital music players made in Japan and Great Britain areexactly alike. The table below shows how much each country can produce of each good with one hour of labor:Output per Hour of LaborCell PhonesJapanGreat Britain232Digital Music Players167Suppose that Japan and Great Britain do not trade with each other. Each has 100 hours of labor with which to producecell phones and digital music players, and the countries are currently producing amounts of each good shown in thetable below:JapanGreat BritainConsumption with 100 Hours of LaborCell Phones2,070160Digital Music Players160140Assume now that each country specializes in producing that good in which it has a comparative advantage. Further,assume for simplicity that one cell phone can be traded for one digital music player.If Japan trades 160 cell phones for 160 digital music players with Great Britain, then, with trade, Japan will be able toadditional cell phones (enter a numeric response usingconsume the same number of digital music players andan integer)

Cell Phones Consumed by Japan After Trade 1. Comparative Advantage: Due to its ability to create…

Answered: Suppose Japan and Great Britain produce…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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Questions 1-8. Use the information in the following table on labor productivities (output per hour) in France and Germany to answer the following questions. Output per hour cheese Wine Labor Endowment O Cheese only O Wine only 1. Which good does France have an absolute advantage in? Both cheese and wine France 2 kg 2.5 bottle 100 hours ONeither cheese nor wine Germany 1 kg 5 bottles 100 hours
Austria and Gemany only produce two goods: beer and sausages. The muaber of workers is 10 in Austria and 30 in Germany and the production possibilities frontiers for both countries are given below. Austria Gemany 600 150 Liters of beer Liters of bee 900 a) What is the ourtput of beer per unit of labor in Austria? b) / What is the output of sausages per unit of labor in Germany? I Which country has a "comparative advantage" in which product? Caleulate and explain briefly. d) production? Explain briefly. 3) Which courtry has an absolute advantage in beer production and which country in sausage sasnes jo s 东 nrs jo
Suppose there exist two imaginary countries, Denali and Congaree. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Country Almonds Shorts (Pounds per hour of labor) (Pairs per hour of labor) Denali 6 12 Congaree 4 16 Suppose that initially Denali uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Congaree uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Denali produces 6 million pounds of almonds and 36 million pairs of shorts, and Congaree produces 12 million pounds of almonds and 16 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries,…
Two countries (A and B) produce tea and oranges using labor. The number of hours of labor required to produce these goods are given as follows: Country Тea Oranges A 6 20 В 8 30 If both countries have 1500 hours of labor available, explain how they can gain from trade.
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?
Suppose there exist two imaginary countries, Denali and Congaree. Their labor forces are each capable of supplying four million hours per day that can be used to produce shorts, almonds, or some combination of the two. The following table shows the amount of shorts or almonds that can be produced by one hour of labor. Country Denali Congaree Shorts Almonds (Pairs per hour of labor) (Pounds per hour of labor) 16 20 Suppose that initially Denali uses 1 million hours of labor per day to produce shorts and 3 million hours per day to produce almonds, while Congaree uses 3 million hours of labor per day to produce shorts and 1 million hours per day to produce almonds. As a result, Denali produces 8 million pairs of shorts and 48 million pounds of almonds, and Congaree produces 15 million pairs of shorts and 20 million pounds of almonds. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of…
Q2. The following table shows the output of textile and auto one unit of labor can produce in the U.K. and the U.S.: Textiles Autos United Kingdom 16 4 United States 12 6 Which country has an absolute advantage in textiles and which country has an absolute advantage in autos? What is the autarky price ratio of autos relative to textiles in each country? Which country has a comparative advantage in textiles and which country has a comparative advantage in autos? Which product should each country export? Suppose the United States has 150 units of labor available. Construct the production-possibilities frontier (PPF) and identify the optimal autarky equilibrium (using an indifference curve) for the United States. Suppose the international price is set at 1 auto:3 textile and the U.S. decides to completely specialize in producing the product in which it has a comparative advantage. How would the above graph change? Use the graph to show the gains from trade…
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. What is a Scottish worker's opportunity cost for 1 sweater? And which has the competitive avantage? If Scottish workers could only produce 1 sweater per hour, would England have the comparative advantage in both scones and sweaters
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?
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.
The following graph is the respective production possibility curves for the USA and South Korea. It shows there total output of medical devices and cars in a state of autarky (no trade), and it illustrates the gains that both countries can benefit from when they engage in trade. 10,000 10,000 8,000 tc 8,000 6,000 6,000 Consumpfion wth trode Consumplion wih trode 4,000 4,000 2,000 2,000 D. 1,000 0.5 1 3 2. 3 Automobiles (millions) Automobiles (millions) (a) USA (b) South Korea Medical Devices Automobiles (millions) USA 4,000 0.5 million South Korea 1,000 2 million Answer the following questions utilizing the textbook and your lecture videos: 1) What assumption in the production possibilities model may lead the model to overstate the gains from trade and cause the actual gains to be less than predicted by the model? 2) Who gains from trade in this scenario? Who may be hurt by trade in this scenario? 3) Do you think there is a role for the government to help those who are hurt by trade in…
ome 3. Gains from trade ses Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per week that they can use to Mog and Study Tools 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. tal Options lege Success Tips Jeans Rye A- Country (Pairs per hour of labor) (Bushels per hour of labor) reer Success Tips Dolorium 4 16 ENDED FOR YOU Arcadia 10 Initially, suppose Arcadia uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Dolorium uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Dolorium produces 12 million pairs of jeans and 16 million bushels of rye, and Arcadia produces 5 million pairs of jeans and 30 million bushels of rye. Assume there are no other countries ng Focused willing to trade goods, so, in the absence…

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