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Suppose the fictional country of everglass produces only two goods
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- The United States and Canada have the production possibilities curves shown above. It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 3 Corn? Why or why not? Show your work.10)Suppose that in a three-hour block of time you can either make 2 batches of chocolate chip cookies or word-process 10 pages of text. In contrast, your roommate Keshawn can either make 4 batches of cookies or word-process 5 pages of text in a three-hour block of time. Which of the following is correct * a)Your comparative advantage is in making cookies. b)None of the above c)Keshawn's comparative advantage is in word-processing text. d)Your comparative advantage is in word-processing text.Various international crises and issues periodically raise the price of oil imports, which can send ripple effects throughout the economy. While it might not be the producer that other countries are, the U.S. has vast supplies of oil. What is a likely reason it still imports oil despite the impact of these international influences on prices? Group of answer choices Importing oil allows the U.S. to focus on developing other industries. The U.S.’s environmental standards are too high to produce oil domestically. The opportunity costs of producing all oil products domestically must still be higher than importing. The U.S. is trying to prop up its political partners by importing their oil.
- The following graph shows a fictional world economy that consists of only two countries, Greenberg and Baxton. Both countries produce airplanes under increasing-cost conditions. Note that the left-hand part of the diagram is a mirror image of a standard supply-demand diagram, and therefore the supply and demand curves slope in directions opposite their usual directions. Greenberg Baxton 30 27 24 +18 + + 15 12 In the absence of trade (that is, autarky), the equilibrium price in Greenberg is $ and the equilibrium price in Baxton is |. (Hint: Enter all monetary values in full. For example, $7,000 rather than $7.) In the absence of trade, which of the following statements is correct? O Greenberg has the comparative advantage in production of airplanes. O Greenberg and Baxton are equally good at producing airplanes. O Baxton has the comparative advantage in production of airplanes. Now suppose both countries open up to international trade with each other. For each country, use the previous…Discuss why combinations of two goods cannot be attained above the PPC.There are two countries Home and Foreign. Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. Foreign has a labor force of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. Suppose world relative demand takes the following form: Demand for apples/demand for bananas = price of bananas/price of apples a-b. On the graph to the right: 1.) Using the 3-point curved line drawing tool, draw the relative demand curve. Label the curve RD. 2) Using the point drawing tool, indicate the equilibrium relative price of apples. Label this point EQ. Carefully follow the instructions above and only draw the required objects. 2 Relative price of apples Pa/Pb 0 035 0.75 05 Relative quantity of apples RS
- Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.Suppose two economies Home (H) and Foreign (F) produce two goods, bread and wine, with only one production factor: labour. Production technology, expressed as marginal product of labour (MPL), is given in the following table: Technologies expressed as MPL Bread Wine Home 1/6 1/12 Foreign 1/4 1/2 Suppose that Home has 2400 units of labour and Foreign has 1800 units of labour. a. ) Derive the Production Possibilities Frontier (PPF) and the Consumption Possibility Frontier (CPF) for Home and Foreign, with bread on the horizontal axis and wine on the vertical axis. What is the autarky equilibrium price of bred relative to wine in each country? b.) What country has the absolute advantage in producing each good? What country has the comparative advantage in producing each good? Briefly explain the difference between these two concepts. Suppose both countries are now free to trade. The world relative price of bread is 1. c. What is the pattern of specialisation and trade?…Assume the situation of an exchange economy. (a) Determine the contract curve as an expression in which good I (x₁) is a function of good 2 (x2).(b) Provide a diagram that illustrates the contract curve and the core of the economy.(c) Determine the Walrasian equilibrium prices.
- What concept describes the situation where the increase in the production of one good leads to a decrease in the potential production of another due to limited resources? A) Comparative Advantage B) Opportunity Cost C) Economies of Scale D) Market EquilibriumWhat is the opportunity cost of one cake if we move from combination A to combination B?If it is more efficient for a country to produce a mixture of all goods (a combination that contains both products on a two dimensional PPC), which statement regarding their PPC is correct? a) This curve is a concave PPC. b) This curve is a convex PPC. c) This curve does NOT demonstrate the Law of Increasing Opportunity Cost. d) This curve does NOT demonstrate the Law of Diminishing Returns. e) It is best for this economy to produce inside the PPC and NOT on the curve.
