Microeconomics - The Economic Problem
Who has the comparative advantage in producing rackets? balls? Explain.
As far as rackets go, if they both product 2 rackets an hour, neither have the advantage. However, because Abby produced twice as many balls an hour as Tom, she has the advantage because her cost per item will be less, thus reducing the end cost.
Based on the fact that the US imports (purchases from other countries) a much greater quantity of toys, games, and sporting goods than it exports (sales to other countries) what would you assume has happened to the US's comparative advantage in these areas to make it opt for imports over exports?
Comparisons in price outweigh all other factors. Proving that cheaper prices from foreign take precedence over domestic products.
Which concept is more important to specialization-comparative advantage or absolute advantage? Explain your reasoning
Depends on the situation. In a competitive business enviorment, absolute advantage may be more important because efficiency within your industry can be an advantage. However in an international trade situation, specialization-comparative advantage would be more important.
What is the opportunity cost in Digital Camcorders when efficient production is being achieved and production of DVD recorders increased from 30 to 70.
Production of camcorders drops from 80 to 50, when DVD recorders increase from 30 to 70.
Looking at Figures 3.3 & 3.4 below, Tom uses all of his resources and produces 2 rackets and 20 balls an hour. Abby uses all her resources and produces 2 rackets and 40 balls an hour. What is Tom's opportunity cost of producing 1 racket, and what is Abby's opportunity cost of producing 1 racket?
TOM's opportunity cost per racket is 10 balls. ABBY's opportunity cost per racket is 20 balls.
Use the information in the table below which states the number of worker hours it takes each country to produce the two products to determine which product each country has a comparative advantage in production: Given the above in #7, and assuming free trade will take place, should the US produce computers, baseballs, or both? Why?
The US should produce both, assusming that the difference in wage prices don't make Costa Rica's additional time still cost lecithin the US made product. In such a case as where the extra time does not increase the end cost compared, the US should only make baseballs.
From which one of these points in figure 2.1 would an increase in the production of one good be possible without decreasing production of the other good? Explain your choice.
X or Z, either of the points should be able to increase in either of the goods. This is because neither is attached to data showing a pull in either direction.
