a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs. Big Country needs to give up 034 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to glve up 1 unit of X for 1 unit of Y and should produce good X 01unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good Y. 01unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 3:4 of a unit of X for 1 unit of Y and should produce good X. 34 of a unit of Y for 1 unit of X and should produce good X Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good Y. b. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. The limits of the terms of trade between these two countries will be 4.3 units of Y and 3:4 of a unit of X. 034 of a unit of Y and 43 units of X. O1 unit of Y and 1 unit of X. O between 1 unit of good X for a unit of good Y and 43 units of good X for a unit of good Y.
a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs. Big Country needs to give up 034 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to glve up 1 unit of X for 1 unit of Y and should produce good X 01unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good Y. 01unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 3:4 of a unit of X for 1 unit of Y and should produce good X. 34 of a unit of Y for 1 unit of X and should produce good X Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good Y. b. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. The limits of the terms of trade between these two countries will be 4.3 units of Y and 3:4 of a unit of X. 034 of a unit of Y and 43 units of X. O1 unit of Y and 1 unit of X. O between 1 unit of good X for a unit of good Y and 43 units of good X for a unit of good Y.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 unts of Y by devoting all its resources
to Y. Comparable figures for Small Natilon are 60 units of X and 60 units of Y. Assuming constant costs, Big Country needs to glve up
0 314 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to glve up 1 unit of X for 1 unit of Y and should
produce good X.
O unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should
produce good Y.
O1 unit of Y for 1 unit of X and should produce good Y. Small Nation needs to glve up 3/4 of a unit of X for 1 unit of Y and should
produce good X.
® 3/4 of a unit of Y for 1 unit of X and should produce good X. Small Nation needs to glve up 1 unlt of X for 1 unit of Y and should
produce good Y.
b. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources
to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. The limits of the terms of trade between these two
countries will be
© 43 units of Y and 3/4 of a unit of X.
3:4 of a unit of Y and 4/3 units of X.
O1 unit of Y and 1 unit of X.
O between 1 unit of good X for a unit of good Y and 4/3 units of good X for a unit of good Y.
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