Question

In: Economics

The table below shows the bushels of corn and bottles of wine that China and U.S....

  1. The table below shows the bushels of corn and bottles of wine that China and U.S. can produce from one day of labor under three different hypothetical situations.

Product

Case 1

Case 2

Case 3

China

U.S.

China

U.S.

China

U.S.

Corn(bushels)

4

2

4

1

4

1

Wine(bottles)

2

1

3

2

2

2

  1. Use the table above to show for each case the commodity in which each country has a comparative advantage or disadvantage. Show your work. Answer the question by calculating relative prices.

Solutions

Expert Solution

Comparative Advantage

Case 1

                                                     

China.                    U.S.

Corn (Bushels)                                 4                         2

Wine (Bottles)                                   2                         1

                                                                                                                                                                    China’s opportunity cost of producing corn is (2/4) or ½ bottle of wine.

U.S. opportunity cost of producing corn is (1/2) or ½ bottle of wine.

        China’s opportunity cost of producing wine is (4/2)=2 bushels of corn.

          U.S.’s opportunity cost of producing wine is (2/1)= 2 bushels of corn.

China

U.S.

Corn (Bushels) in terms of wine bottles (Pc/Pw)                               

1/2

1/2

Wine (Bottles)   in terms of bushels of corn (Pw/Pc)

2

2

Case 2

China.              

U.S.

Corn (Bushels)

4

1

Wine (Bottles)  

3

2

China’s opportunity cost of producing corn is (3/4) or 3/4 bottle of wine.

U.S. opportunity cost of producing corn is (2/1) or 2 bottles of wine.

        China’s opportunity cost of producing wine is (4/3)=1.33 bushels of corn.

          U.S.’s opportunity cost of producing wine is (1/2)= 1/2 bushel of corn.

China

U.S.

Corn (Bushels) in terms of wine bottles (Pc/Pw)                               

3/4

2

Wine (Bottles)   in terms of bushels of corn (Pw/Pc)

1.33

1/2

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

The following table shows the bushels of corn and kgs of beef that Mainland and Wishland...
The following table shows the bushels of corn and kgs of beef that Mainland and Wishland can produce per day. Corn Beef Mainland 12 Corn 16 Beef Wishland 4 corn 8 beef (a) Identify the commodity in which Mainland and Wishland have absolute advantage in and absolute disadvantage in. Identify the commodity in which Mainland and Wishland have comparative advantage in and comparative disadvantage in. (b) Indicate whether or not trade is possible and the basis for trade if possible....
Table 1 below shows the schedule of demand and supply in the Market for Michigan wine....
Table 1 below shows the schedule of demand and supply in the Market for Michigan wine. Use this table to answer the following questions. Table 1 - Demand & Supply in the Market for Michigan Wine Market Price (P ) Quantity Demanded (Qd ) Quantity Supplied (Qs ) $0 150 0 $10 125 50 $20 100 100 $30 75 150 $40 50 200 $50 25 250 $60 0 300 Explain why a price of $40 cannot be an equilibrium price...
The table below shows the distribution of income in the U.S. in the year 1978. Table...
The table below shows the distribution of income in the U.S. in the year 1978. Table 19.1 Percent Distribution of Aggregate Household Income in 1978, by Fifths of Households Households Percent of Income Lowest Fifth (under $6,391) 4.3 Second Fifth ($6,392 - $11,955) 10.3 Third Fifth ($11,956 - $18,122) 16.9 Fourth Fifth ($18,122 - $26,334) 24.7 Top Fifth ($26,335 and over) 43.9 Refer to Table 19.1. What percentage of income is received by the bottom 20% of the households? a....
Suppose that France and Germany both produce wine and schnitzel. The table below shows combinations of...
Suppose that France and Germany both produce wine and schnitzel. The table below shows combinations of the goods that each country can produce in a day. France    Germany Wine​ (Bottles) Schnitzel​ (Pounds) Wine​ (Bottles) Schnitzel​ (Pounds) 0 12 0 25 1 9 1 20 2 6 2 15 3 3 3 10 4 0 4 5 5 0 1. Who has the comparative advantage in producing wine and who has the comparative advantage in producing​ schnitzel? A. France has...
The table below shows the number of deaths in the U.S. in a year due to...
The table below shows the number of deaths in the U.S. in a year due to a variety of causes. For these questions, assume these values are not changing from year to year, and that the population of the United States is 312 million people. Cause Deaths Passenger car occupant (driver or rider) 13,100 Motorcycle (driver or rider) 4,500 Tornado 553 Skydiving 56 a) What is the probability that an American chosen at random died as a passenger car occupant...
The table below shows the number of deaths in the U.S. in a year due to...
The table below shows the number of deaths in the U.S. in a year due to a variety of causes. For these questions, assume these values are not changing from year to year, and that the population of the United States is 312 million people. Cause Deaths Passenger car occupant (driver or rider) 13,100 Motorcycle (driver or rider) 4,500 Tornado 553 Skydiving 56 a) What is the probability that an American chosen at random died as a passenger car occupant...
The table below shows the number of deaths in the U.S. in a year due to...
The table below shows the number of deaths in the U.S. in a year due to a variety of causes. For these questions, assume these values are not changing from year to year, and that the population of the United States is 312 million people. Cause Deaths Passenger car occupant 13,100 Motorcycle driver 4,500 Tornado 553 Skydiving 56 Make sure your answer is accurate to at least 2 significant figures (values after leading zeros) c) What is the probability that...
The following table gives the bushels of corn per acre, y resulting from the use of...
The following table gives the bushels of corn per acre, y resulting from the use of the various amounts of fertilizer in pounds per acre, x, produced on a farm in each of 10 years from 1971 to 1980.   Year n y x 1971 1 40 6 1972 2 44 10 1973 3 46 12 1974 4 48 14 1975 5 52 16 1976 6 58 18 1977 7 60 22 1978 8 68 24 1979 9 74 26 1980...
Table 1 below shows the schedule of demand and supply in the Market for Michigan wine. Use this table to answer the following questions.
Table 1 below shows the schedule of demand and supply in the Market for Michigan wine. Use this table to answer the following questions.MarketPrice (P )QuantityDemanded (Qd )Quantity Supplied (Qs )$01500$1012550$20100100$3075150$4050200$5025250$600300Explain why a price of $40 cannot be an equilibrium price in this market.Draw a figure (call it Figure 1) representing the Market for Michigan wine (i.e. demand and supply curves). Be sure to fully label the graph. You can assume that demand and supply are continuous between points.On Figure...
How many bushels of corn, if any, will the United States export or import at the prices below
Refer to the table below: Domestic Market supply of and Demand for CornTotal Quantity Supplied per WeekPrice per BushelTotal Quantity Demanded per weekSurplus (+) or Shortage (-)12,000$52,000+10,00010,00044,000+6,0007,00037,00004,000211,000-7,0001,000116,000-15,000a. How many bushels of corn, if any, will the United States export or import at the prices below? b. Use this information to construct the U.S. export supply curve and import demand curve for corn.c. Suppose that the only other corn-producing nation is France, where the domestic price is $4. Which country will export corn...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT