MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 18, Problem 2SQ
To determine
The production of Country U’s economy.
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1. Consider the countries of Canada and Mexico. In one month, Canada can produce a maximum of 150 wheat or 200 barley. Mexico can also maximize production of 150 wheat, but their maximum barley output is 150. a. Assuming each country devotes half of its resources to growing each crop, calculate the production level of each crop in each country and overall production. b. Determine comparative advantage in each and show how you found this. c. Calculate production levels in each country of each crop under specialization and also overall production.
d. How much of each crop was gained by specialization?
2. Using cheddar cheese, explain in two sentences or fewer the following: a. Income Effectb. Substitution Effectc. Law of Diminishing Marginal Returns
If France is said to have an absolute advantage over Mexico in the production of wheat, this means that, given the same resources,
Mexico must have an absolute advantage in producing some good other than wheat.
a. France can produce more wheat than Mexico.
b. France has an absolute advantage in all goods that are complements to wheat.
c. France must have an absolute advantage over Mexico in producing all goods.
d. Mexico must have a comparative advantage over France in the production of wheat.
An average worker in Brazil can produce an ounce of soybeans in 20 minutes and an ounce of coffee in 60 minutes, while an average worker in Peru can produce an ounce of soybeans in 50 minutes and an ounce of coffee in 75 minutes.a. Who has the absolute advantage in coffee? Explain.b. Who has the comparative advantage in cof-fee? Explain.c. If the two countries specialize and trade with each other, who will import coffee? Explain.d. Assume that the two countries trade and that the country importing coffee trades 2 ounces of soybeans for 1 ounce of coffee. Explain why both countries will benefit from this trade.
Chapter 18 Solutions
MACROECONOMICS FOR TODAY
Ch. 18.4 - Prob. 1GECh. 18.6 - Prob. 1GECh. 18 - Prob. 1SQPCh. 18 - Prob. 2SQPCh. 18 - Prob. 3SQPCh. 18 - Prob. 4SQPCh. 18 - Prob. 5SQPCh. 18 - Prob. 6SQPCh. 18 - Prob. 7SQPCh. 18 - Prob. 8SQP
Ch. 18 - Prob. 9SQPCh. 18 - Prob. 10SQPCh. 18 - Prob. 11SQPCh. 18 - Prob. 1SQCh. 18 - Prob. 2SQCh. 18 - Prob. 3SQCh. 18 - Prob. 4SQCh. 18 - Prob. 5SQCh. 18 - Prob. 6SQCh. 18 - Prob. 7SQCh. 18 - Prob. 8SQCh. 18 - Prob. 9SQCh. 18 - Prob. 10SQCh. 18 - Prob. 11SQCh. 18 - Prob. 12SQCh. 18 - Prob. 13SQCh. 18 - Prob. 14SQCh. 18 - Prob. 15SQCh. 18 - Prob. 16SQCh. 18 - Prob. 17SQCh. 18 - Prob. 18SQCh. 18 - Prob. 19SQCh. 18 - Prob. 20SQ
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