Calculate opportunity cost .

Question

CHA The following table describes the production possibilities of two cities in the country of Baseballia: Pairs of Red Pairs of White Socks per Worker per Hour Socks per Worker per Hour Boston 3 3 Chicago 2 1 a. Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago? b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? c. If the cities trade with each other, which color sock will each export? d. What is the range of prices at which mutually beneficial trade can occur?

Answer 1

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 3, Problem 6PA

Subpart (a):

To determine

Calculate opportunity cost.

Subpart (b):

To determine

Calculate opportunity cost.

Subpart (c):

To determine

Specialization in the production.

Subpart (d):

To determine

Trade and the price of the product.

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CHA The following table describes the production possibilities of two cities in the country of Baseballia: Pairs of Red Pairs of White Socks per Worker per Hour Socks per Worker per Hour Boston 3 3 Chicago 2 1 a. Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago? b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? c. If the cities trade with each other, which color sock will each export? d. What is the range of prices at which mutually beneficial trade can occur?

The following table describes the production possibilities of two cities in the country of Baseballia: Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour Boston 3 3 Chicago 2 1 Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago? Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? If the cities trade with each other, which color sock will each export? What is the range of prices at which mutually beneficial trade can occur?

Suppose that a tailor in Cottonland can sew either 40 cotton shirts or 10 silk shirts per week, and a tailor in Silkland can sew either 18 cotton shirts or 6 silk shirts per week. There are 20 tailors in Cottonland and 20 tailors is Silkland. Answer the following questions: 2.1. What country has the absolute advantage in sewing cotton shirts? What country has the absolute advantage in sewing silk shirts? 2.2. What country has the comparative advantage in sewing cotton shirts? What country has the comparative advantage in sewing silk shirts? Numerically 2.3. If the two countries specialize and produce according to the comparative advantage criterion, how much in terms of cotton and silk shirts each country will produce per week? Fill in the table below with your calculations. Cotton shirts/per week Silk shirts/per week Cottonland Silkland

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 3, Problem 6PA

Subpart (a):

To determine

Calculate opportunity cost.

Subpart (b):

To determine

Calculate opportunity cost.

Subpart (c):

To determine

Specialization in the production.

Subpart (d):

To determine

Trade and the price of the product.

Expert Solution & Answer

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Check out sample textbook 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 3, Problem 6PA

Subpart (a):

To determine

Calculate opportunity cost.

Subpart (b):

To determine

Calculate opportunity cost.

Subpart (c):

To determine

Specialization in the production.

Subpart (d):

To determine

Trade and the price of the product.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook 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 3, Problem 6PA

Subpart (a):

To determine