Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 19, Problem 8E
a)
To determine
The autarky situation of the economy.
b)
To determine
The free trade situation of the economy.
c)
To determine
The induction for the condition.
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If the fictitious country of Islandia puts all of its production resources into fish, it can produce 60 units of fish. If it puts all of its
production resources into coconuts, it can produce 45 units of coconuts. If the fictitious country of Mountania puts all of its production
resources into fish, it can produce 30 units of fish. If it puts all of its production resources into coconuts, it can produce 20 units of
coconuts. Assume that both countries have constant cost functions for both products.
Instructions: Round your answers to 2 decimal places.
a. What is the opportunity cost of producing 1 unit of fish in Islandia?
0.5 unit(s) of coconuts
b. What is the opportunity cost of producing 1 unit of coconuts in Islandia?
2 unit(s) of fish
c. What is the opportunity cost of producing 1 unit of fish in Mountania?
45 unit(s) of coconuts
d. What is the opportunity cost of producing 1 unit of coconuts in Mountania?
15 unit(s) of fish
e. Mountania
v has a comparative advantage in the…
If the fictitious country of Islandia puts all of its production resources into fish, it can produce 60 units of fish. If it puts all of its production resources into coconuts, it can produce 45 units of coconuts. If the fictitious country of Mountania puts all of its production resources into fish, it can produce 30 units of fish. If it puts all of its production resources into coconuts, it can produce 20 units of coconuts. Assume that both countries have constant cost functions for both products.
Consider a region with two export products (gloves and socks) and two local goods (tattoos and manicures). The production of each export good is subject to localization economies, so each city specializes in one export good. According to Mr. Wizard, “If my two assumptions (one for export products and one for local goods) are correct, all the cities in the region will be the same size.” Assume that Mr. Wizard’s logic is correct. List his assumptions and explain why together they imply the region’s cities will be the same size.
Chapter 19 Solutions
Macroeconomics (Fourth Edition)
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