Unit 2-HW-3

A production possibilities frontier can shift outward if

new tech

Jamaica has a comparative advantage in the production of Coolers Radios Jamaica 12 6 Norway 24 3

. radios and Norway has a comparative advantage in the production of coolers. <Jamaica 12/6 = OC for radios> <Norway 24/3 =OC for radios> <Jamaica 24/3=OC for coolers> <Norway 3/24 =OC for coolers>

At which of the following prices would both Iowa and Nebraska be able to gain from trade with each other? Corn Soybeans Iowa 30 45 Nebraska 40 80

1.8 bushels of soybeans for 1 bushel of corn. because: for corn between 1.5 and 2 <1.5+2=3.5/2=1.75 or 1.8> for soybeans between .67 and .5 <.67+.5=1.17 or 1>

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

15 blankets and 35 meals. Because take the total number of blankets from C and subtract that with the total number of blankets from F <10-25=-15> decline of 15 blankets then do the same with meals <5-40=-35> decline of 35 meals

Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision? Coolers Radios Jamaica 12 6 Norway 24 3

24 coolers Because you need to add 12 to the production of coolers

Corn (in bushels) Wheat (in bushels) 2000 0 1600 700 1200 1300 800 1800 400 2200 0 2500 What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

400 bushels of corn because wheat is being increased you have to see how much corn you have to give up for the production of corn this means subtracting 1600- 1200= 400 bushels of corn are given up for the increase of wheat

Assume that Jamaica and Norway each has 4 days available for production. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of radios increased by Jamaica 12 6 Norway 24 3

6.

Hammers Nails 3 900 6 ? 9 300 If the production possibilities frontier is bowed outward, then "?" could be

750. Because it bows outward would have to be higher than 600

Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah and Charles could benefit from trading with each other if they traded at a price of Sarah= 8 vases 32 mugs Charles= 10 vases 25 mugs

<Sarah: 8/32= .25, 32/8=4> Sarah has a comparative advantage in mugs <Charles: 10/25= .4, 25/10= 2.5> Charles has a comparative advantage in vases Between 4 and no less than 2.5 which is 3 mugs per vase

If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade? Alice (100=P, 200=L) Betty (180=P, 180=L)

Alice should specialize in Lemonade because she has a lower opportunity cost than Betty when it comes to lemonade. Betty should specialize in PIZZA because she has a lower opportunity cost when it comes to producing pizza compared to Alice. Alice<200/100=2 opportunity cost of pizzas> <100/200=.5 opportunity cost Lemonade>

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then

Dave has a comparative advantage in the production of sweaters

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn.

Output Produced in One Day Coolers Radios Jamaica 12 6 Norway 24 3 Jamaica should specialize in

Radios <Jamaica 12/6 = OC for radios> <Norway 24/3 =OC for radios> <Jamaica 24/3=OC for coolers> <Norway 3/24 =OC for coolers>

When an economy is operating at a point on its production possibilities frontier, then

There is no way they can produce more of one good without producing less of another

Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From the table we know that Iowa has Corn Soybeans Iowa 30 45 Nebraska 40 80

comparative advantage in the production of corn and Nebraska has a comparative advantage in the production of soybeans. I=45/30= 1.5 bushels of soybeans (loses this many soybeans by producing corn) 30/45=.67 bushels of corn (loses this much by producing soybeans) N=80/40= 2 bushels of soybeans (loses this many soybeans by producing corn) 40/80=.5 bushels of corn (loses this much by producing soybeans)

Which of the following concepts cannot be illustrated by the production possibilities frontier?

equality

Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah has an absolute advantage in Sarah= 8 vases 32 mugs Charles= 10 vases 25 mugs

he production of mugs and a comparative advantage in the production of mugs.

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

the available production technology.

Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,

trade makes everyone better off

Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. Using the information from the table, Iowa's opportunity cost of producing one bushel of corn is Corn Soybeans Iowa 30 45 Nebraska 40 80

​1.5 bushels of soybeans and Nebraska's is 2 bushels of soybeans. Because to figure out Iowas OC of producing corn you need to 45/30= 1.5 bushels of soybeans 80/40= 2 bushels of soybeans (Nebraska)