Study with Quizlet and memorize flashcards containing terms like Suppose Russia produces only tablets and smartphones. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both smartphones and tablets. The shape of Russia's production possibilities frontier (PPF) should reflect the fact that as ...
If Mexico accepts the deal the United States proposes while continuing to consume 200 million bushels of wheat, then Mexico will need to produce a total of 350 million bus hels of wheat. This means Mexico will be producing at the horizontal intercept of the production possibilities frontier. However, Mexico will be able to consume 10 million cars in addition to the 200 million bushels of wheat. Therefore, the consumption point with trade is (200, 10), and Mexico should accept the deal because it gets the same amount of wheat but 4 million more cars than without trade.
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.
A production possibilities frontier is a graph that shows the various combinations of outputs that an economy can possibly produce given the available factors of production and production technology.
Japan has a comparative advantage in producing grain because it has a lower opportunity cost in terms of cars given up (5/9 cars for the Unit ed States versus 1/3 cars for Japan). Assume that without trade, half of each country's workers produce cars and half produce grain.
Similarly, China has a comparative advantage in producing shirts because it gives up only 1/10 computer per shirt while the United States gives up 1/5 computer per shirt. Therefore, China would export shirts, and both countries would benefit from trade. The price of a computer can be expressed in terms of shirts.
If Mexico accepts the deal the United States proposes while continuing to consume 200 million bushels of wheat, then Mexico will need to produce a total of 350 million bus hels of wheat. This means Mexico will be producing at the horizontal intercept of the production possibilities frontier. However, Mexico will be able to consume 10 million cars in addition to the 200 million bushels of wheat. Therefore, the consumption point with trade is (200, 10), and Mexico should accept the deal because it gets the same amount of wheat but 4 million more cars than without trade.
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.
A production possibilities frontier is a graph that shows the various combinations of outputs that an economy can possibly produce given the available factors of production and production technology.
Japan has a comparative advantage in producing grain because it has a lower opportunity cost in terms of cars given up (5/9 cars for the Unit ed States versus 1/3 cars for Japan). Assume that without trade, half of each country's workers produce cars and half produce grain.
Similarly, China has a comparative advantage in producing shirts because it gives up only 1/10 computer per shirt while the United States gives up 1/5 computer per shirt. Therefore, China would export shirts, and both countries would benefit from trade. The price of a computer can be expressed in terms of shirts.