Question

In: Economics

Suppose that France has 175,000 gallons of milk, Germany has 600,000 cookies, The U.S. has 1,000,000...

Suppose that France has 175,000 gallons of milk, Germany has 600,000 cookies, The U.S. has 1,000,000 cookies. France traded 50,000 gallons milk to Germany for 120,000 cookies; and the U.S. traded 192,000 cookies to France for 80,000 gallons of milk.

a) What is the price of milk in terms of cookies? (i.e. what is the amount of cookies you can get for one gallon of milk?)

b) What is the price of cookies in terms of milk? (i.e. what is the amount of milk you can get for one cookie?)

c) What is the final consumption opportunities for France, Germany, and the U.S. (what is the quantity of each product that is available to each of these countries as a result of trade?)

Expert Solution

France has = 175000 gallons of milk

Germany has = 600000 cookies

US has = 192000 cokies

France traded milk for cokies with Germany

France gets 120000 cokies when he gives 50000 gallons of milk

50000 gallons of milk = 120000 cokies

so 1 gallons of milk = 120000/50000

= 2.4 cokies

price of milk in terms of cokies = 120000/50000

= 2.4 cokies

or France with US

80000 gallons of milk = 192000 cokies

so 1 gallons of milk = 192000/80000

= 2.4 cokies

price of cookies in terms of milk

120000 cokies = 50000 gallons of milk ( Germany with france)

1 cokies = 50000/120000

= 0.416

= 0.42 gallons of milk

192000 cokies = 80000 galons of milk (France with US)

1 cokies = 80000/192000

= 0.416

price of 1 cokies = 0.42 gallns of milk

total production of milk in France = 175000 gallons

France trade with Germany

france give Germany 50000 gallons of milk in exchange of 120000 cokies

after trade with france Germany have = 50000 gallons of milk and (600000 - 120000) = 480000 cokies

france now have after trade with Germany (175000 - 50000) = 1250000 gallons of milk and 120000 cokies

France trade with US

france give US 800000 gallons of milk in exchange of 192000 cokies

after trade with france US have = 80000 gallons of milk and (1000000-192000) = 808000 cokies

france after trade with (Germany and Us ) have (125000-80000) = 45000 gallons of milk and (120000+192000) = 312000 cokies

Rahul Sunny answered 11 months ago

suppose two countries, France & Germany, use only capital and labor for production. France has 2050...

suppose two countries, France & Germany, use only capital and labor for production. France has 2050 units of capital and 916 units of labor and Germany has 816 units of capital and 270 units of labor. Both countries produce two goods, car and wine. In Germany there are 366 units of capital and 135 units of labor employed in the wine industry. In frnace, there are 926 units of capital and 618 units of labor employed in the wine industry....

Suppose you are choosing between milk and cookies. If the opportunity cost of cookies in terms...

Suppose you are choosing between milk and cookies. If the opportunity cost of cookies in terms of milk decreases, then the budget curve will: shift inward rotate inward. shift outward rotate outward

10 McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has...

10 McBride's Dairy has 200 gallons of cream and 600 gallons of skimmed milk and has incurred $1,000 of joint costs at the split-off point. The amount of this cost that will be allocated to skimmed milk using the physical units method is a.$750 b.$1,000 c.$250 d.$0 11 When weight factors are used in the weighted average method, they are a.subtracted from the actual physical units to arrive at weighted physical units b.added to the actual physical units to arrive...

Suppose that the number of gallons of milk sold per day at a local supermarket are...

Suppose that the number of gallons of milk sold per day at a local supermarket are normally distributed with mean and standard deviation of 419.9 and 26.93, respectively. What is the probability that on a given day the supermarket will sell between 432 and 438 gallons of milk? Question 2 options: 1) We do not have enough information to calculate the value. 2) 0.0036 3) 0.2508 4) 0.6734 5) 0.0758 Suppose that the mean and standard deviation of the scores...

Suppose that France and Germany both produce rye and shoes. France's opportunity cost of producing a...

Suppose that France and Germany both produce rye and shoes. France's opportunity cost of producing a pair of shoes is 4 bushels of rye while Germany's opportunity cost of producing a pair of shoes is 10 bushels of rye. By comparing the opportunity cost of producing shoes in the two countries, you can tell that (France, Germany) has a comparative advantage in the production of shoes and (France, Germany) has a comparative advantage in the production of rye. Suppose that France...

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...

What are some of the reasons why France has become a junior economic partner to Germany?...

What are some of the reasons why France has become a junior economic partner to Germany? a. Laws reduced nimbleness of companies to respond to changes in economic conditions limited. b. Labor agreements dictate less work hours per week compared with competing countries and reduce flexibility of workers to perform different tasks. c. Labor unions and farmers disrupt commerce to prevent changes to laws and agreements proposed to reduce Government costs (i.e., subsidies) or improve economic efficiencies (i.e., competitiveness). d....

U. S. Pharma Corporation is headquartered in New Jersey but has research sites in Germany, France,...

U. S. Pharma Corporation is headquartered in New Jersey but has research sites in Germany, France, the United Kingdom, Switzerland, and Australia. Research and development of new pharmaceuticals is the key to ongoing profits, and U. S. Pharma researches and tests thousands of possible drugs. The company’s researchers need to share information with others within and outside the company, including the U. S. Food and Drug Administration, the World Health Organization, and the International Federation of Pharmaceutical Manufacturers & Associations....

A U.S. exporter has a €1,000,000 receivable due in one year. Suppose the current spot exchange...

A U.S. exporter has a €1,000,000 receivable due in one year. Suppose the current spot exchange rate S($/€) = $1.2/€, the one-year forward exchange rate F360($/€) = $1.25/€, the annual U.S. interest rate i$ = 5%, and the annual euro zone interest rate i€ = 4%. a. How to implement a hedge using a forward contract? Compute the guaranteed dollar proceeds in one year using the forward hedge. b. How to implement a money market hedge? Compute the guaranteed dollar...

Suppose that output per worker in the U.S. and Germany is given by the following: Wheat Cars...

Suppose that output per worker in the U.S. and Germany is given by the following: Wheat Cars U.S. 200 100 Germany 100 50 Which of the following is true? a. the U.S. has an absolute advantage in both products and comparative advantage does not exist b. the U.S. has an absolute advantage in both products and Germany has a comparative advantage in wheat c. the U.S. has an absolute advantage in both products, but Germany has a comparative advantage in cars d. the U.S. has...