Suppose a worker in Germany can produce 56 computers or 280 tons of grain per month....

Suppose a worker in Germany can produce 56 computers or 280 tons of grain per month. Suppose a worker in Poland can produce 100 computers or 300 tons of grain per month.

a. Graph the PPF/PPC for each country on one graph.

b. What is the opportunity cost of a computer in Germany? _________

c. What is the opportunity cost of a computer in Poland? ________

d. What is the opportunity cost of a ton of grain in Germany? ______

e. What is the opportunity cost of a ton of grain in Poland? ______

f. Which country has the comparative advantage in computers? _______

g. Which country has the comparative advantage in grain? _______

h. What is a reasonable range for the rate of exchange of computers for grain? (In other words, what might be the terms of trade that both nations would agree to? Be sure to include the minimum and maximum values.)

Solutions

Expert Solution

b. Opportunity cost of a computer in Germany= 280/56=5 tons of grains

c. Opportunity cost of a computer in Poland=300/100=3 tons of grains

d. Opportunity cost of a ton of grain in Germany=56/280=0.2 computers

e. Opportunity cost of a ton of grain in Poland= 100/300=0.33 computers

f. Which country has the comparative advantage in computers?

Opportunity Cost of computer production is lower in Poland. We can say that Poland has the comparative advantage in computers.

g. Which country has the comparative advantage in grain?

Opportunity Cost of grain production is lower in Germany. We can say that Germany has the comparative advantage in grain.

Range of rate of exchange of computers should be between the opportunity cost in these two countries.

1 computer should be exchanged for a somewhere between 3 tons and 5 tons of grain.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Assume that an American worker can produce 5 cars per year of 10 tons of grain...

Assume that an American worker can produce 5 cars per year of 10 tons of grain per year, whereas a Japanese worker can produce 15 cars per year or 5 tons of grain per year. Assume labor is the only input used in car and grain production. a) Which country has the absolute advantage in producing cars? In producing grain? Briefly explain. b) For the United States, what is the opportunity cost of producing a car? What is the opportunity...

An American worker can produce either 5 cars or 9 tons of grain a year. A...

An American worker can produce either 5 cars or 9 tons of grain a year. A Japanese worker can produce either 3 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car 1 Ton of Grain United States 1/5...

An American worker can produce either 5 cars or 8 tons of grain a year. A...

An American worker can produce either 5 cars or 8 tons of grain a year. A Japanese worker can produce either 4 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car 1 Ton of Grain United States Japan...

Nation 1 can produce Y tons of product A per worker per day and Z tons...

Nation 1 can produce Y tons of product A per worker per day and Z tons of product B per worker per day. Nation 2 can produce G tons of A per worker per day and H tons of product B per worker per day (Y, Z, G, H are numbers of your choice). A. Which nation has an absolute advantage in A? and in B?j B. In Nation 1, what is the opportunity cost of A (in terms of...

Assume that workers in Bulgaria and the U.K. can produce the following (in tons per worker...

Assume that workers in Bulgaria and the U.K. can produce the following (in tons per worker per year): U.S. production/ consumption before trade U.S. Production after specialization US consumption after specialization US Gains from trade Mexico production/ consumption before trade Mexico production after specialization Mexico consumption after specialization Mexico Gains from trade Crops Bulgaria 4 U.K. 10 Machines OR 8 OR 10 a) Which country’s producers have an absolute advantage in producing (a)crops, and (b) machines? Explain. b) Which country’s...

Malaysia can produce 20 tons of fish or 5 tons of rice per month. Thailand can...

Malaysia can produce 20 tons of fish or 5 tons of rice per month. Thailand can produce 25 tons of fish or 20 tons of rice per month. a) Assuming both countries are using the same amount of capital and labor, which country has the absolute advantage in producing fish? In producing rice? b) What is the opportunity cost of producing one ton of fish for Malaysia? For Thailand? Show work. c) What is the opportunity cost of producing one...

Mac and Izzie each produce computers and television sets. Mac can produce 60 computers per month...

Mac and Izzie each produce computers and television sets. Mac can produce 60 computers per month or 60 television sets per month. Izzie can produce 30 computers per month or 120 television sets per month. Q1. Use the information above to draw the production possibility frontier(PPF) for Mac and another for Izzie on the graph. Put computers on the horizontal axis and TV sets on the vertical axis. Maintain this throughout. Q2. Calculate the opportunity cost for producing computers and...

Suppose that in a year, an American worker can produce 100 shirts or 20 computers, while...

Suppose that in a year, an American worker can produce 100 shirts or 20 computers, while a Chinese worker can produce 100 shirts or 10 computers. we can describe the production possibilities of the Americans and the Chinese in a table: Output per Worker per year U.S. China Shirts 100 100 Computers 20 10 1.Now allow American and China to trade with each other. Find a mutually agreeable trade that makes each country better off than it was before it...

Suppose that in a year, an American worker can produce 100 shirts or 20 computers, while...

Suppose that in a year, an American worker can produce 100 shirts or 20 computers, while a Chinese worker can produce 100 shirts or 10 computers. we can describe the production possibilities of the Americans and the Chinese in a table: Output per Worker per year U.S. China Shirts 100 100 Computers 20 10 Q1. (1pt) Which country has an absolute advantage in the production of each good? Country Reason Shirts Computers Q2. (2 pts)Calculate the opportunity cost of producing...

In Brazil, one worker can make 5 tons of steel or 80 computers. In France, one...

In Brazil, one worker can make 5 tons of steel or 80 computers. In France, one worker can make 10 tons of steel or 40 computers. a. Which country has the absolute advantage in the production of steel? In computers? How can you tell. b. Calculate the opportunity cost of producing 80 additional computers in Brazil and in France. (Your calculations may involve fractions). c. Which country has a comparative advantage in steel? In computers? How did you figure this...

Subjects