Suppose there exist two imaginary countnes, Denali and Sequoia. Their labor forces are each capable of supplying four million hours per day that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almends or shorts that can be produced by one hour of labor. Almonds Shorts Country (Pounds per hour of labor) (Pairs per hour of labor) Denali 16 Sequela 20 Suppose that initially Denall uses 1 million hours of labor per day to produce almonds and 3 millian hours per day to produce shorts, while Sequoia uses 3 million hours of labor per day to produce almonds and 1 million hours per day to produce shorts. As a result, Denali produces 8 million pounds of almonds and 46 million pairs of shorts, and Sequoia produces 15 mition pounds of almonds and 20 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts et produces Denal's opportunity cost of producing 1 pound of aimonds is of shorts. Therefore, advantage in the production of shorts. of shorts, and Sequoia's opportunity cost of producing 1 pound of almonds has a comparative advantage in the production of almonds, and has a comparative Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces almonds will produce million pounds per day, and the country that produces shorts will produce million pairs per day In the following table, enter each country's production decision on the third row of the table (marked Production Suppose the country that produces almands trades 18 milion pounds of almonds to the other country in exchange for 54 million pairs of shorts. in the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action, and
Suppose there exist two imaginary countnes, Denali and Sequoia. Their labor forces are each capable of supplying four million hours per day that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almends or shorts that can be produced by one hour of labor. Almonds Shorts Country (Pounds per hour of labor) (Pairs per hour of labor) Denali 16 Sequela 20 Suppose that initially Denall uses 1 million hours of labor per day to produce almonds and 3 millian hours per day to produce shorts, while Sequoia uses 3 million hours of labor per day to produce almonds and 1 million hours per day to produce shorts. As a result, Denali produces 8 million pounds of almonds and 46 million pairs of shorts, and Sequoia produces 15 mition pounds of almonds and 20 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts et produces Denal's opportunity cost of producing 1 pound of aimonds is of shorts. Therefore, advantage in the production of shorts. of shorts, and Sequoia's opportunity cost of producing 1 pound of almonds has a comparative advantage in the production of almonds, and has a comparative Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces almonds will produce million pounds per day, and the country that produces shorts will produce million pairs per day In the following table, enter each country's production decision on the third row of the table (marked Production Suppose the country that produces almands trades 18 milion pounds of almonds to the other country in exchange for 54 million pairs of shorts. in the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action, and
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter2: Some Tools Of The Economist
Section: Chapter Questions
Problem 7CQ
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