Assume two countries (the U.S. and China) produce and consume only two goods (smartphones and corn) which are produced using only two factors of production (labor and capital). Assume further that the production of corn is capital-intensive, while production of smartphones is labor-intensive. Assume that the U.S. has 200 units of labor and 150 units of capital, while China has 500 units of labor and 150 units of capital. Construct the Edgeworth box for each country. For each Edgeworth box, let the origin for the corn industry be at the bottom left corner of the Edgeworth box, the vertical axis represents labor and the horizontal axis represent capital. Explain how the two Edgeworth boxes differ. Graphically, illustrate the points of efficient production and explain why these points are efficient. (Hint: What are the curves? What do they represent? What are the slopes of these curves? What do the slopes represent?)

The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that Group of answer choices the United States has comparative advantage in producing computer chips. the United States has comparative advantage in producing televisions. the opportunity cost of producing computer chips in the United States is higher than that in Japan. the opportunity cost of producing televisions in Japan is higher than that in the United States.

Isabella and Antonio are auto mechanics. Isabella takes 8 hours to replace a clutch and 6 hours to replace a set of brakes. Antonio takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. State whether anyone has an absolute advantage at either task and, for each task, identify who has a comparative advantage. Instructions: Enter your responses rounded to two decimal places. The opportunity cost of replacing a set of brakes for Isabella is The opportunity cost of replacing a set of brakes for Antonio is has a comparative advantage in brake replacement. has a comparative advantage in clutch replacement. has an absolute advantage in brake replacement. has an absolute advantage in clutch replacement. Antonio Isabella Antonio Antonio

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Assume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. a) Graph both countries' PPF. Clearly state which trade theory you are using and explain the reason. Note that the shape of the production possibility frontier depends on the theory. b) Show relative autarky price in Germany and France country. c) Which country has a comparative advantage in the production of apple? Why?

Use the graph to answer the following question: Plant R and Plant S both produce radios and calculators. Which of the following statements is most true?  A) Plant R has the comparative advantage to produce radios but not calculators.  B) Plant R has the comparative advantage to produce both goods.  C) Plant S has the comparative advantage to produce radios but not calculators.  D) Plant S has the absolute advantage to produce both calculators and radios.

4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Yosemite and Denali. Both countries produce peas and pistachios, each initially (i.e., before specialization and trade) producing 24 million pounds of peas and 12 million pounds of pistachios, as indicated by the grey stars marked with the letter A. PISTACHIOS (Millions of pounds) 64 56 48 40 32 24 16 8 0 0 PPF 8 Yosemite 24, 12 16 24 32 40 48 PEAS (Millions of pounds) 56 64 ? PISTACHIOS (Millions of pounds) 64 56 48 40 32 24 16 8 0 0 PPF 8 Denali 16 24 32 40 48 PEAS (Millions of pounds) 56 64 Yosemite has a comparative advantage in the production of while Denali has a comparative advantage in the production of . Suppose that…

Suppose that Spain and Switzerland both produce oil and cheese. Spain's opportunity cost of producing a pound of cheese is 4 barrels of oil while Switzerland's opportunity cost of producing a pound of cheese is 10 barrels of oil. By comparing the opportunity cost of producing cheese in the two countries, you can tell that    has a comparative advantage in the production of cheese and    has a comparative advantage in the production of oil.   Suppose that Spain and Switzerland consider trading cheese and oil with each other. Spain can gain from specialization and trade as long as it receives more than    of oil for each pound of cheese it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than    of cheese for each barrel of oil it exports to Spain.   Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of oil) would allow both Switzerland and Spain to gain from…

Suppose now that Sylvania has a comparative advantage in the production of coffee. Again, Maldonia and Sylvania exchange 12 million pounds of lemons for 12 million pounds of coffee. The following graph shows the PPF for Sylvania, as well as its initial consumption at point A. Place a black point (cross symbol) on the following graph to indicate Sylvania's consumption after trade. 48 2 42 COFFEE (Millions of pounds) 38 PPF 30 24 18 122 O 0 6 12 Sylvania A 38 42 48 24 30 18 LEMONS (Millions of pounds) + Consumption After Trade ? <--Do graph After trade, Sylvania consumes million pounds of lemons as well as million pounds of coffee. 9, 12, 18, 24 9, 12, 18, 24 True or False: Without engaging in international trade, Maldonia and Sylvaniawould not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) O True O False