EBK ECONOMICS FOR TODAY
9th Edition
ISBN: 8220101414250
Author: Tucker
Publisher: Cengage Learning US
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Chapter 28, Problem 6SQ
To determine
The
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There are 100 workers in Pakistan, and each worker can produce either 10 shirts or 2 hats. There are 200 workers in the Bangladesh, and each can produce 4 shirts or 10 hats.]
1. Draw the Production Possibility Curves (PPC) for each country. What is the opportunity cost of shirts in Pakistan? What is the opportunity cost of shirts in Bangladesh? Which country has a comparative advantage in the production of shirts?
2. In the absence of trade, if Pakistan consumes 600 shirts, how many hats can it consume? In the absence of trade, if Bangladesh consumes 500 hats, how many shirts can it consume?
3. Someone now proposes that Bangladesh and Pakistan enter into a trade agreement. Under this agreement, the Bangladesh will give Pakistan 500 hats and Pakistan will give Bangladesh 200 shirts. If Pakistan continues to consume 600 shirts, how many hats will it be able to consume under this proposal? If Bangladesh continues to consume 500 hats, how many shirts will it be able to consume under this…
Argentina and Brazil are considering the potential gains of trade. There is only one factor of production: labor. There
are only two goods being produced in either economy: coffee and wine. Argentina can employ 10,000 hours of labor
per month. Producing 1 lb. of coffee requires 2 hours of labor, and producing 1 bottle of wine requires 4 hours of
labor, in Argentina.
Similarly, Brazil can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 1 hour of labor, and
producing 1 bottle of wine requires 5 hours of labor, in Brazil.
Use the following information for the next two questions: the U.S. can produce 4 tons of
potatoes per day or 2 tons of wheat per day. Ireland can produce 3 tons of potatoes per
day or one ton of wheat.
17.
The opportunity cost for Ireland producing one ton of potatoes is how many tons of
wheat?
а.
one-fourth
b.
1/3
с.
1
d.
3
The U.S. has the comparative advantage in producing
potatoes.
wheat.
а.
b.
с.
both.
d.
neither.
It is possible to have a comparative advantage without having any absolute advantages.
а.
true
b.
false
Chapter 28 Solutions
EBK ECONOMICS FOR TODAY
Ch. 28.4 - Prob. 1GECh. 28.6 - Prob. 1GECh. 28 - Prob. 1SQPCh. 28 - Prob. 2SQPCh. 28 - Prob. 3SQPCh. 28 - Prob. 4SQPCh. 28 - Prob. 5SQPCh. 28 - Prob. 6SQPCh. 28 - Prob. 7SQPCh. 28 - Prob. 8SQP
Ch. 28 - Prob. 9SQPCh. 28 - Prob. 10SQPCh. 28 - Prob. 11SQPCh. 28 - Prob. 1SQCh. 28 - Prob. 2SQCh. 28 - Prob. 3SQCh. 28 - Prob. 4SQCh. 28 - Prob. 5SQCh. 28 - Prob. 6SQCh. 28 - Prob. 7SQCh. 28 - Prob. 8SQCh. 28 - Prob. 9SQCh. 28 - Prob. 10SQCh. 28 - Prob. 11SQCh. 28 - Prob. 12SQCh. 28 - Prob. 13SQCh. 28 - Prob. 14SQCh. 28 - Prob. 15SQCh. 28 - Prob. 16SQCh. 28 - Prob. 17SQCh. 28 - Prob. 18SQCh. 28 - Prob. 19SQCh. 28 - Prob. 20SQ
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- Exercise: production per unit of labour: US: Wheat 300, Beef 100 Argentina: Wheat 20, Beef 20 a. Does either country have an absolute advantage in the production of wheat or beef? Explain b. What is the opportunity cost of wheat in each country? c. What is the opportunity cost of beef in each country? d. Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.arrow_forwardExhibit 15-3 Potatoes and wheat output (tons per day) Country Potatoes Wheat United States 4 2 Ireland 3 1 In Exhibit 15-3, the United States has an absolute advantage in producing: both. potatoes. neither. wheat.arrow_forwardSuppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively. h) Who gains from trade? Who loses? What is the impact if any on the world? (i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.arrow_forward
- Country A can produce 20 units of wheat or 10 units of corn, while Country B can produce 15 units of wheat or 5 units of corn. Which country has the comparative advantage in producing wheat?arrow_forwardSuppose Argentina (A) and Bolivia (B) only trade with each other and they both produce the same two goods: grocery (G) and fish (F). Given its resources, Argentina can produce either 2 units of grocery per day or 1 unit of fish; Bolivia can produce either 5 units of grocery or 4 units of fish. a. If there were no trade, what would be the local price of fish in each country, measured in units of grocery? b. If trade is allowed, which country will export fish and which country will export grocery (if any)? c. Suppose Argentina offers to buy fish from Bolivia for 1.20 units of grocery. Does Bolivia accept the trade? Why or why not? d. With trade, what are the bound of the price of fish, measured in units of grocery?arrow_forwardPer Winter Hat US $10.00 Russia 5,000 Rubles Per Bushel of Wheat US $1.00 Russia 2,500 Rubles a. What is the opportunity cost of producing one more winter hat in the US? In Russia?b. What is the opportunity cost of producing one more bushel of wheat in the US? In Russia?c. Which country has a comparative advantage in winter hats? In wheat?arrow_forward
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