Calculate the opportunity cost .

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Answer 1

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Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

(b)

To determine

Absolute advantage in making bread.

(c)

To determine

Calculate the comparative advantage for producing bread.

(d)

To determine

Impact of specialization in production by both parties.

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

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Suppose that in the United States, the opportunity cost of producing a motor engine is 4 auto bodies. In Canada, the opportunity cost of producing a motor engine is 2 auto bodies. a. What is the opportunity cost of producing an auto body for the United States? b. What is the opportunity cost of producing an auto body for Canada? c. Which country has a comparative advantage in the production of auto bodies? d. Which country has a comparative advantage in the production of motor engines? Blank 1 Blank 1

Jared takes 10 minutes to wash dishes and 20 minutes to write a paper. Jason takes 10 minutes to wash dishes and 30 minutes to write a paper. Which of the following statements is correct? Jared has a comparative advantage in writing a paper. O Jared has absolute advantage in writing the paper. Jared has a comparative advantage in washing dishes. O Jared has absolute advantage in washing the dishes.

Pat and Kris are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Pat takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Kris takes 6 hours to brew a gallon of root beer and 4 hours to make a pizza. A.What is each roommate’s opportunity cost of making a pizza? Who has the absolute advantage in making pizza? Who has the comparative advantage in making pizza? B.If Pat and Kris trade foods with each other, who will trade away pizza in exchange for root beer? C.The price of pizza can be expressed in terms of gallons of root beer. What is the highest price at which pizza can be traded that would make both roommates better off? What is the lowest price? Explain.

Answer 2

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

(b)

To determine

Absolute advantage in making bread.

(c)

To determine

Calculate the comparative advantage for producing bread.

(d)

To determine

Impact of specialization in production by both parties.

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

(b)

To determine

Absolute advantage in making bread.

(c)

To determine

Calculate the comparative advantage for producing bread.

(d)

To determine

Impact of specialization in production by both parties.

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

(b)

To determine

Absolute advantage in making bread.

(c)

To determine

Calculate the comparative advantage for producing bread.

(d)

To determine

Impact of specialization in production by both parties.

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Expert Solution & Answer

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Answer 5

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

(b)

To determine

Absolute advantage in making bread.

(c)

To determine

Calculate the comparative advantage for producing bread.

(d)

To determine

Impact of specialization in production by both parties.

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Answer 6

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

Answer 7

Chapter 2, Problem 8SP

(a)

To determine

Calculate the opportunity cost.

Answer 8

(b)

To determine

Absolute advantage in making bread.

Answer 9

(b)

To determine

Absolute advantage in making bread.

Answer 10

(c)

To determine

Calculate the comparative advantage for producing bread.

Answer 11

(c)

To determine

Calculate the comparative advantage for producing bread.

Answer 12

(d)

To determine

Impact of specialization in production by both parties.

Answer 13

(d)

To determine

Impact of specialization in production by both parties.

Answer 14

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Answer 15

(e)

To determine

Ratios of bread and pie when both persons engage in trade.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 2.A - Prob. 1SP Ch. 2.A - Prob. 2SP Ch. 2.A - Prob. 3SP Ch. 2 - Prob. 1QR Ch. 2 - Prob. 2QR Ch. 2 - Prob. 3QR Ch. 2 - Prob. 4QR Ch. 2 - Prob. 5QR Ch. 2 - Prob. 6QR Ch. 2 - Prob. 7QR

Calculate the opportunity cost .

Solution Summary: The author compares the opportunity cost of making bread and the comparative advantage of producing bread.

Concept explainers

Calculate the opportunity cost.

Absolute advantage in making bread.

Calculate the comparative advantage for producing bread.

Impact of specialization in production by both parties.

Ratios of bread and pie when both persons engage in trade.

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Chapter 2 Solutions