39) Refer to Table 2-5. This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.
a. If each country has a total of 9,000 labor hours to devote to the production of the two goods, draw the production possibilities frontier for each country. Put “Digital Camera” on the horizontal axis and “Wheat” on the vertical axis. Be sure to identify the intercept values on your graphs.
b. Suppose each country allocates 60% its labor hours to wheat production and 40% to the production of digital cameras. Complete Table 2-6 below to show each country’s output of the two products.
Table 2-6: Production and Consumption with no Trade
Digital Camera Output
Wheat Output
(bushels)
China
South Korea
Total
c. If the two countries do not trade and consume whatever they produce, identify the current production and consumption point for each country on their respective production possibilities frontiers. Label China’s consumption point “C” and South Korea’s consumption point, “K.”
d. Suppose the two countries specialize and trade. Who should produce digital cameras and who should produce wheat? Explain your answer.
e. Complete Table 2-7 below to show each country’s output with specialization.
Table 2-7: Output with Specialization
Digital Camera Output
Wheat Output
(bushels)
China
South Korea
Total
f. Did specialization increase the combined output for the two countries without any increase in resources? If so, by how much?
g. Suppose China and South Korea agree to trade so that in exchange for 1,200 bushels of wheat, the exporter of wheat receives 48 digital cameras. Complete Table 2-8 below to show each country’s consumption bundle after trade.
Table 2-8: Consumption with Trade
Digital Camera
Wheat
(bushels)
China
South Korea
h.Show the consumption points after trade on each country’s production possibilities frontier. Label these points “B” for China and “J” for South Korea.
i.Has trade made the two countries better off? Explain your answer.
40) Suppose in Belize, the opportunity cost of producing a sailboat is 5 hang gliders. In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders.
a. What is the opportunity cost of producing a hang glider for Belize?
b. What is the opportunity cost of producing a hang glider for Honduras?
c. Which country has a comparative advantage in the production of hang gliders?
d. Which country has a comparative advantage in the production of sailboats?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more