ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:10.
The following table describes the number of yards of cloth and barrels of wine
that can be produced with a week's worth of labor in England and Portugal. Assume that no other
inputs are needed.
a.
Cloth
Wine
England?
b.
Portugal?
England
8 yards
2 barrels
If there is no trade, what is the price (opportunity cost) of wine and cloth in
If there is no trade, what is the price (opportunity cost) of wine and cloth in
C.
Suppose each country
has 1 million weeks of labor
available per year. Draw the
production possibilities frontier for
each country with wine on the
horizontal axis and cloth on the
vertical axis (label them). Indicate
the Marginal Rate of Transformation
(MRT).
d.
Draw the production
possibilities curve for the two
Portugal
12 yards
6 barrels
countries. Keep wine on the horizontal
axis and cloth on the vertical axis
(table them).
Transcribed Image Text:e.
Which country has an absolute advantage in the production of which good(s)?
Which country has a comparative advantage in the production of which good(s)?
f.
If the countries start trading with each other, which country will specialize and
export which good?
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