Directions: Answer the following question. Your answer must be typewritten but the graph may be hand drawn. This assignment is due at the beginning of class on Wednesday, February 7. The table below shows the production possibilities of 2 countries, Y and Z, that produce 2 goods L and M. Country/Good X Y L 3 5 M 4 7 Draw country Y's production possibilities frontier and show that it can consume outside of that production possibilities frontier if it specializes according to comparative advantage and trades with country X. Provide a complete explanation for your work.
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- What is comparative advantage?QUESTION 1 Pis Tim Pies Dave 10 The graphs above depict loe Cream loe Cream the amounts of ice cream and pies that Tim and Dave can make in a given weekend. Use this to answer the questions that follow. Suppose that currently Dave is producing 3 units of pies and 2 units of ice cream, while Tim is producing 5 units of pies and 3 units of ice cream. If they instead specialize based upon the principle of comparative advantage, what would be the change in the total number of pies and ice cream produced? O a. +5 pies and +3 ice cream O b. +2 pies and +1 ice cream O c. +2 pies and no change in ice cream O d. +1 pie and +2 ice cream QUESTION 2scenario 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.
- Wagons Tricycles James 16 32 Click to select your answer The table above shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. Which of the following statements true? O A. Lucy has a comparative advantage in making both products. O B. Lucy has a comparative advantage in making tricycles and James in making wagons. O C. James has a comparative advantage in making both products. O D. Lucy has a comparative advantage in making wagons and James in making tricycles. Lucy 18 24A worker in country A can produce either 5 computers or 45 tons of rice, while a worker in country B canproduce either 7 computers or 42 tons of rice. a. Graph the production possibilities curve for each country. On which point of the curve would eachcountry produce if the workers spent half of their time producing each good? b. Which country has absolute advantage? Which country has comparative advantage? In theproduction of rise Country A absolute advantage c. If there was trade, which country would specialize in the production of rice? d. At what price of computers would the countries agree to trade?Opportunity Cost and the Gains from Specializ PPF Review Problems What is the opportunity cost of an extra calculator for Smith? What is the opportunity cost of an extra calculator for Jones? Who has the absolute advantage in computer production? Who has the absolute advantage in calculator production? Who has the comparative advantage in calculator production? Who has the comparative advantage in computer production? Jones 6 120
- EX LO d @ Safari File Edit View History Bookmarks Window Help Lily ✓ My Home Courses Rental Options V Catalog and Study Tools Dashboard College Success Tips Help Career Success Tips Give Feedback « 100 CENGAGE MINDTAP PISTACHIOS (Millions of pounds) 48 42 36 Homework (Ch 03) The following graphs show the production possibilities frontiers (PPFS) for Shenandoah and Denali. Both countries produce peas and pistachios, each initially (i.e., before specialization and trade) producing 18 million pounds of peas and 9 million pounds of pistachios, as indicated by the grey stars marked with the letter A. 30 24 18 PPF 12 6 0 0 C Mind Tap - Cengage Learning 6 S Shenandoah A 12 18 24 30 PEAS (Millions of pounds) 36 42 48 ? JAN 28 PISTACHIOS (Millions of pounds) 48 42 36 30 24 6 C MindTap - Cengage Learning 0 ng.cengage.com PPF 6 Denali A 12 18 24 30 36 PEAS (Millions of pounds) 42 48 Shenandoah has a comparative advantage in the production of while Denali has a comparative advantage in the…Elif can produce 6 pies or 30 cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1hour A) What is the opportunity cost of producing cakes for Elif? What is the opportunitycost of producing cakes for Ahmet?B) Who has a comparative advantage in producing pies and who has a comparativeadvantage in producing cakes?C) On the PPF lines, show what Elif produces and what Ahmet produces when theyspecialize.D) Suppose that they set the exchange price as 1 Pie = 3 Cakes. If they specialize andtrade, show an exchange situation that is beneficial for both (compared to thesituation you found at part (b))?F) What is the minimum and maximum exchange price they could have determined foran exchange that will be beneficial for both of them?Use le below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. Point Production of X Production of Y 40 B 4. 36 28 12 16 E 16 The data in Table 2.1.1 illustrate that Select one: A. the producer has a comparative advantage in the production of X. B. the producer has a comparative advantage in the production of Y. C. the opportunity cost of producing an additional unit of Y increases as the production of Y increases. O D. the opportunity cost of producing an additional unit of Y is constant as the production of X increases. O E. the opportunity cost of producing an additional unit of Y decreases as the production of Y increases. Clear my choice
- 2. Comparative and absolute advantage Elijah and Aneesha are farmers. Each one owns a 16-acre plot of land. The following table shows the amount of squash and maize each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing squash or maize or to produce squash on some of the land and maize on the rest. Elijah Aneesha MAIZE (Pounds) On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Aneesha's PPF. 160 144 128 112 96 80 64 48 32 16 0 Squash (Pounds per acre) 8 28 0 Maize (Pounds per acre) 8 7 80 160 240 320 400 480 560 640 720 800 SQUASH (Pounds) Elijah's PPF Elijah's opportunity cost of producing 1 pound of maize is maize is pounds of squash. Because Elijah has a comparative advantage in the production of maize, and Aneesha's PPF has an absolute advantage in the production of squash, and ? has an absolute advantage in the…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 table shows the amount of good A and good B that two countries could produce if they devoted all their resources to that good. Assume both countries have the same quantity of resources and the trade-off between good A and good B remains constant as resources are shifted from one good to another. Answer the questions below and show calculations where appropriate. Canada India Good A 600 500 Good B 950 1200 Draw a straight-line PPF graph for Canada. Draw a straight-line PPF graph for India. Which country has the comparative advantage in good A? In good B? Explain. What is India’s marginal opportunity cost of producing good A? Good B? Based on the data given, what is the terms of trade range for good A in terms of units of good B?