ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 40, Problem 9DQ
To determine
The reason as to why all the manufacturing is not done in low wage countries.
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Suppose country A and B have a labour force of 1 and produce hops and barley using only labour. Country A's unit labour cost are 0.5 for hops and 0.5 for barley, country B's 0.2 for hops and 0.4 for barley. Suppose that both are needed to brew beer in equal quantitiy, so that both national and international demand has the property that equal amounts of barley and hops are demanded. How much more beer (as a percentage) will be brewed under international trade than in autarky?
Please enter the percentage rounded to a whole number (up or down is both acceptable) without the percentage sign.
Suppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows:
Output in Thousands of Litres
Milk
Cranberry Juice
Northland
6
Or
3
Sounthland
2
Or
1
a) Which country has the absolute advantage in producing milk? b) Which country has the absolute advantage in producing cranberry juice? c) Which country has the comparative advantage in producing milk? d) Which country has the comparative advantage in producing cranberry juice? e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?
The nation of Ectenia has 40 competitive apple orchards, which sell apples at the world price of $2 per apple. The following equations describe the
production function and the marginal product of labor in each orchard:
120L – L2
MPL
120 - 2L
where Q is the number of apples produced in a day, Lis the number of workers, and MPL is the marginal product of labor.
Suppose the world price of apples doubles to $4 per apple.
What is each orchard's labor demand as a function of the daily wage W?
OL= 120 – 2W
OL= 2,400 – 5W
OL= 60 – 0.25W
OL= 60 – 0.125W
What is the market's labor demand?
OL= 60 – 0.125W
OL= 120 – 10W
OL= 2,400 – 5W
OL= 2,400 – 10W
Ectenia has 200 workers who supply their labor inelastically.
The equilibrium wage is S
per worker per day. Each orchard hires
workers and makes a profit of S
per day. (Note: Assume
that wages are the firm's only costs.)
Chapter 40 Solutions
ECONOMICS W/CONNECT+20 >C<
Ch. 40.2 - Prob. 1QQCh. 40.2 - Prob. 2QQCh. 40.2 - Prob. 3QQCh. 40.2 - Prob. 4QQCh. 40 - Prob. 1DQCh. 40 - Prob. 2DQCh. 40 - Prob. 3DQCh. 40 - Prob. 4DQCh. 40 - Prob. 5DQCh. 40 - Prob. 6DQ
Ch. 40 - Prob. 7DQCh. 40 - Prob. 8DQCh. 40 - Prob. 9DQCh. 40 - Prob. 10DQCh. 40 - Prob. 11DQCh. 40 - Prob. 12DQCh. 40 - Prob. 13DQCh. 40 - Prob. 14DQCh. 40 - Prob. 1RQCh. 40 - Prob. 2RQCh. 40 - Prob. 3RQCh. 40 - Prob. 4RQCh. 40 - Prob. 5RQCh. 40 - Prob. 6RQCh. 40 - Prob. 7RQCh. 40 - Prob. 8RQCh. 40 - Prob. 9RQCh. 40 - Prob. 10RQCh. 40 - Prob. 11RQCh. 40 - Prob. 12RQCh. 40 - Prob. 13RQCh. 40 - Prob. 1PCh. 40 - Prob. 2PCh. 40 - Prob. 3PCh. 40 - Prob. 4P
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