Suppose that Portugal and Germany both produce rye and shoes. Portugal's opportunity cost of producing a pair of shoes is 4 bushels of rye while Germany's opportunity cost of producing a pair of shoes is 10 bushels of rye. By comparing the opportunity cost of producing shoes in the two countries, you can tell that    has a comparative advantage in the production of shoes and    has a comparative advantage in the production of rye.   Suppose that Portugal and Germany consider trading shoes and rye with each other. Portugal can gain from specialization and trade as long as it receives more than    of rye for each pair of shoes it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than    of shoes for each bushel of rye it exports to Portugal.   Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of rye) would allow both Germany and Portugal to gain from trade? Check all that apply. 8 bushels of rye per pair of shoes   2 bushels of rye per pair of shoes   18 bushels of rye per pair of shoes   6 bushels of rye per pair of shoes

Consider a simplified example of two countries - Singapore and Indonesia - producing two goods – telecommunications equipment and electrical circuit apparatus. Using all its resources, Singapore can produce either 50 telecommunications equipment, or 100 electrical circuit apparatus. Using all its resources, Indonesia can produce either 1,000 telecommunications equipment, or 5,000 circuit apparatus. (a) Which country/countries has/have the absolute advantages and the comparative advantages in the production of telecommunications equipment, and of electrical circuit apparatus? Explain and show. (b) Consider the case of constant opportunity cost. What will be the resulting patterns of trade, terms-of-trade, and the aggregate production and consumption? Provide a diagram to illustrate, with telecommunications equipment on the y-axis. (c) It is found that contrary to the above, there is no complete specialisation in both Singapore and Indonesia. Instead, Singapore partially specialises in…

Suppose the United States can produce cars at an opportunity cost of two computers for each car it produces. Suppose Mexico can produce cars at an opportunity cost of eight computers for each car it produces. Discuss how both countries can gain from free trade.

Suppose Canada can produce cars at an opportunity cost of 2 computers for each car it produces. Suppose Mexico can produce cars at an opportunity cost of 8 computers for each car it produces. Indicate how both countries can gain from free trade.

Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces pistachios will produce. million pounds per day and the country that produces chinos will produce million pairs per day.

Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula = 2 cans tuna fish Tunata: 1 can baby formula = 4 cans tuna fish a. In what product should each nation specialize? Canswicki should produce (Click to select) ♥ and Tunata should produce | (Click to select) ♥ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 2.5 cans tuna fish: (Click to select) ii. 1 can baby formula = 1 can tuna fish: (Click to select) v iii. 1 can baby formula = 5 cans tuna fish: | (Click to select) v

Suppose that Slovenia and Slovakia both produce sunflowers and liquor. Slovenia's opportunity cost of producing a case of liquor is 6 bushels of sunflowers while Slovakia's opportunity cost of producing a case of liquor is 11 bushels of sunflowers. By comparing the opportunity cost of producing liquor in the two countries, you can tell that production of liquor and has a comparative advantage in the production of sunflowers. Suppose that Slovenia and Slovakia consider trading liquor and sunflowers with each other. Slovenia can gain from specialization and trade as long as it receives more than of sunflowers for each case of liquor it exports to Slovakia. Similarly, Slovakia can gain from trade as long as of liquor for each bushel of sunflowers it exports to Slovenia. it receives more than has a comparative advantage in the Based on your answer to the last question, which of the following prices of trade (that is, price of liquor in terms of sunflowers) would allow both Slovakia and…

Suppose that Slovenia and Wales both produce olive oil and broccoli. Slovenia's opportunity cost of producing a bushel of broccoli is 4 crates of olive oil while Wales's opportunity cost of producing a bushel of broccoli is 12 crates of olive oil. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of olive oil. has a comparative advantage in the Suppose that Slovenia and Wales consider trading broccoli and olive oil with each other. Slovenia can gain from specialization and trade as long as it receives more than of olive oil for each bushel of broccoli it exports to Wales. Similarly, Wales can gain from trade as long as it of broccoli for each crate of olive oil it exports to Slovenia. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of olive oil) would allow both Wales and Slovenia…

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…

American worker takes 20 hours to produce one computer and 300 hours to produce an RV. A Japanese worker takes 30 hours to produce one computer and 450 Hours to produce an RV. Which country has a comparative advantage in what product?  Why?