Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 4P
Subpart a:
To determine
The budget constraint and trade.
Subpart b:
To determine
slope of budget line.
Subpart c:
To determine
The slope of the budget line.
Subpart d:
To determine
The budget constraint and trade.
Subpart e:
To determine
The budget constraint and trade.
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5. Suppose that when Japan puts all of its resources into the production of textiles it can produce
250,000 units of textiles and if it puts all of its resources into furniture it can produce 500,000 units
of furniture. If Vietnam puts all of its resources into textiles it can produce 60,000 units of textiles
and if it puts all of its resources into the production of furniture it can produce 30,000 units of
furniture. Draw the Production Possibilities curve for each country and answer the following
questions.
a. What is the opportunity cost of one unit of textile and one unit of furniture for each
country?
b. Which country has the absolute advantage to produce textiles? Which country has the
absolute advantage to produce and furniture?
c. Which country has the comparative advantage to produce textiles? Which country has
the comparative advantage to produce and furniture?
Q/ Country X and Country Y are neighbours. Both Country X and Country Y can produce two goods: food and clothing. In one week, Country X can produce 4,400 clothing units or 2,200 food units, or a mix of the two. In one week, Country Y can produce 5,000 clothing units or 2,000 food units, or a mix of the two.For both Country X and Country Y, their individual trade-offs between clothing units and food units are constant, regardless of how they allocate their time. Currently, Country X produces 2,400 clothing units and 1,000 food units per week while Country Y produces 2,500 clothing units and 1,000 food units per week.
c. Which country has a comparative advantage in food production? Which country has acomparative advantage in clothing production? Illustrate your answer using the PPC and showall the calculations. d. Should Country X and Country Y specialize and trade with one another? Why?
3. Suppose that you and your roommate Pat are planning a Valentine’s Day party at your
apartment. Before you have the party you have to clean your apartment and earn $100
for food and drinks. Suppose that, working alone, either you or Pat could clean the
apartment in two days. Working together you could both clean the apartment in one
day. You can make $25 a day working at the dining hall, and Pat can make $50 a day as
a video game instructor.
According to the principle of comparative advantage, what is the most efficient
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Chapter 1 Solutions
Microeconomics
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Prob. 1ADQCh. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2ARQCh. 1.A - Prob. 1AP
Ch. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7APCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
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