Economics (7th Edition) (What's New in Economics)
Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 9, Problem 9.3.10PA

Subpart (a):

To determine

Production possibility frontier and the trade.

Subpart (b):

To determine

Trade relation.

Subpart (c):

To determine

Production possibility frontier and the trade.

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The graph on the right shows Tanzania's production possibilities frontier for cashew nuts and mangoes. Assume that the output per hour of work is 8 bushels of cashew nuts or 2 bushels of mangoes, and that Tanzania has 1,000 hours of labor. Without trade, Tanzania evenly splits its labor hours between cashews and mangoes and produces and consumes at point A. Suppose Tanzania opens trade with Kenya, and Kenya's output per hour of work is 1 bushel of cashew nuts or 1 bushel of mangoes. Having the comparative advantage, Tanzania completely specializes in cashew nuts. Locate the point of production for Tanzania. bushels of mangoes and bushels of cashew The point of production for Tanzania includes nuts. (Enter your responses as whole numbers.) Suppose Tanzania keeps 5,000 bushels of cashew nuts and exports the remaining 3,000 bushels. The terms of trade are 1 bushel of mangoes for 2 bushels of cashew nuts. Locate the point that shows the amount of cashew nuts and mangoes that Tanzania…
Suppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat.   a. If each state specialized in their respective comparative advantage:   Iowa would produce  million bushels of corn and  million bushels of wheat.   Nebraska would produce  million bushels of wheat and  million bushels of corn.     Now assume Nebraska trades 120 million bushels of wheat for 120 million bushels of corn. With specialization and this trade, Nebraska will end up with  million bushels of corn and  million bushels of wheat, while Iowa will end up with   million bushels of corn and   million bushels of wheat.   b.…
The table shows the units of output a worker can produce per hour in Germany and Korea for two different goods: spaetzle and kimchi. Use this table to answer the question. One worker in Germany One worker in Korea Pounds of spaetzle per hour Which of the statements is true? 2 Pounds of kimchi per hour Korea has a comparative advantage in the production of spaetzle, while Germany has a comparative advantage in the production of kimchi. Korea has a comparative advantage in the production of both goods. Germany has a comparative advantage in the production of spaetzle, while Korea has a comparative advantage in the production of kimchi. Germany has a comparative advantage in the production of both goods.
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