Question
In: Economics
Suppose that China has 60 workers. 4 chinese workers can produce a motorcycle and 6 chinese...
- Suppose that China has 60 workers. 4 chinese workers can produce a motorcycle and 6 chinese workers can produce a car. So china can produce a maximum of 15 motorcycles and a maximum of 10 cars.
America also has 60 workers. 3 American workers can produce a motorcycle and 4 American workers can produce a car. So america can produce a maximum of 20 motorcycles and a maximum of 15 cars.
- Which country has an absolute advantage in producing motorcycles?
- Which country has an absolute advantage in producing cars?
- Calculate the opportunity cost of producing motorcycles in each
country.
- Which country has a comparative advantage in producing
motorcycles?
- Calculate the opportunity cost of producing cars in each
country.
- Which country has a comparative advantage in producing
cars?
Solutions
Expert Solution
a)
Ans: America has an absolute advantage in producing motorcycles.
Ans: America has an absolute advantage in producing cars.
Ans: The opportunity cost of producing motorcycles in China = 0.67 cars and in America = 0.75 cars
Ans: China has a comparative advantage in producing motorcycles.
Explanation:
A country has an absolute advantage in the production of a good , which it produces more quantities of that good with the existing or available resources as compared to other country.
The opportunity cost of producing motorcycles in China = 10 /15 = 0.67 cars
The opportunity cost of producing motorcycles in America = 15/20 = 0.75
A country has an comparative advantage in the production of a good in which it has lower opportunity cost as compared to other country.
b) Ans: The opportunity cost of producing cars in China = 1.5 motorcycles and in America = 1.33 motorcycles
Explanation:
The opportunity cost of producing cars in China = 15 /10 = 1.5 motorcycles
The opportunity cost of producing cars in America = 20 / 15 = 1.33 motorcycles
c) Ans: America has a comparative advantage in producing cars.
Explanation:
A country has an comparative advantage in the production of a good in which it has lower opportunity cost as compared to other country.
Rahul Sunny answered 2 years agoRelated Solutions
American and Japanese workers can each produce 4 cars a year. An American worker can produce...
American and Japanese workers can each produce 4 cars a year. An
American worker can produce 10 tons of grain a year, whereas a
Japanese worker can produce 5 tons of grain a year. To keep things
simple, assume that each country has 100 million workers.
Construct a world production possibilities frontier, assuming
our world consists of only the U.S. and Japan.
5.1 What is the maximum amount of grain our world could consume
if the world wished to consume...
The china can produce 12 cases of iphones or 8 calculators. India can make 6 cases...
The china can produce 12 cases of iphones or 8 calculators.
India can make 6 cases of iphones or 12 calculators with each unit
of production. Each country dedicates a total of 1000 units of
production for iphones and calculators. Country iphone calculators
China 12 8 India 6 12 Q.1) What will be trade ratio of iphones and
calculators for both countries to be succesful ? Q.2) Based on
above information if trading ratio is 1 who gains from trade...
Canadian and Japanese workers caneach produce 4 cars per year. A Canadian worker can produce...
Canadian and Japanese workers can
each produce 4 cars per year. A Canadian worker can produce 10
tonnes of grain per year, whereas a Japanese worker can produce 5
tonnes of grain per year. To keep things simple, assume that each
country has 100 million workers.a. For this situation, construct
a table like what we had in the class.b. Graph the production
possibilities frontier of the Canadian and Japanese
economies.c. For Canada, what is the
opportunity cost of a car?...
Suppose the U.S. is engaging with China in a discussion of trade policies. The Chinese diplomat...
Suppose the U.S. is engaging with China in a discussion of trade
policies. The Chinese diplomat explains to their U.S. counterpart
that labor in China is less expensive than in the U.S., so the U.S.
consumer would benefit from cheaper products produced in China.
Also, since the U.S. has a highly skilled labor force, capable of
making the capital intensive goods that the Chinese consumer
desires, both countries would benefit from trade.
The U.S. diplomat counters this argument, stating that...
Free trade with China hurts the US economy because Chinese workers are willing to work at lower wages compared with US workers.
True or False. Draw a graph (such as supply and demand diagrams) to support your answer:
Free trade with China hurts the US economy because Chinese workers are willing to work at lower wages compared with US workers.
(a) Suppose Emma can produce 2 cookie or 6 brownies per hour, and Seamus can produce...
(a) Suppose Emma can produce 2 cookie or 6 brownies per hour,
and Seamus can produce 4 cookies or 4 brownies per hour. Explain
who has an absolute and who has a comparative advantage for cookies
and brownies.
(b) How would this explain trade between Emma and Seamus?
4. Assume that this economy – suppose it is China – has the following production function:...
4. Assume that this economy – suppose it is China – has the
following production function: Y = F(K, L) = K0.5L0.5
a. State the per-worker production function.
b. Suppose the saving rate is 24 percent, the depreciation rate
is 6 percent and the population growth rate is 2 percent. Calculate
the following three variables in the steady state: capital stock
per worker, output per worker, and consumption per worker.
c. Draw a graph for the Solow Model in the...
Building a new factory to produce 50- and 60-inch TV screens can cost $4 billion. But...
Building a new factory to produce 50- and 60-inch TV screens can
cost $4 billion. But for more than ten years, manufacturers of
these screens have continued to build new plants. By building so
many plants, they have expanded productive capacity at a rate that
has exceeded the demand for big-screen TVs. In fact, during one
recent year, the supply of big-screen TVs was estimated to exceed
demand by 12%, rising to 16% in the future. One state-of-the-art
plant built...
Suppose Capital One is advertising a 60-month, 5.38% APR motorcycle loan. If you need to borrow...
Suppose Capital One is advertising a
60-month,
5.38%
APR motorcycle loan. If you need to borrow
$9,400
to purchase your dream Harley-Davidson, what will be your
monthly payment? (Note: Be careful not to round any intermediate
steps less than six decimal places.)
Suppose Capital One is advertising a 60-month, 5.69% APR motorcycle loan. If you need to borrow...
Suppose Capital One is advertising a
60-month,
5.69%
APR motorcycle loan. If you need to borrow
$8,900
to purchase your dream Harley-Davidson, what will be your
monthly payment? (Note: Be careful not to round any intermediate
steps less than six decimal places.)
Your monthly payment will be
$______
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...
ADVERTISEMENT