Suppose that towns collect resources from their surroundings. Then, through trade, they attempt to obtain other desirable items. Mortarville, an urban town that specializes in brick and ore, wants wood to build roads so that it can expand and connect to other major cities. Mortarville has a willingness to pay $50 for wood, since wood is hard for them to obtain Mayflair also needs wood to build grain silos for their wheat harvests. Mayflair is willing to pay $45 for wood. Timber, the only foresting company, sets the price of wood at $60. The change in total surplus that arises due to trades between Timber and the towns is John finds a set of wood in his garage which he is willing to sell for no less than $35. John chooses to sell the set to Mayflair for $40 instead of to Mortarville for $45. As a result of John's transaction with Mayflair total surplus increased, but the market is inefficient total surplus decreased, and the market is inefficient total surplus increased, and the market is efficient total surplus decreased, but the market is efficient.
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- Comparative and absolute advantage Antonio and Caroline are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest. Alfalfa Barley (Bushels per acre) (Bushels per acre) Antonio 40 8 Caroline 28 7 On the following graph, use the blue line (circle symbol) to plot Antonio's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Caroline's PPF. Antonio's PPFCaroline's PPF01002003004005006007008009001000200180160140120100806040200BARLEY (Bushels)ALFALFA (Bushels) _______ has an absolute advantage in the production of alfalfa, and ______ has an absolute advantage in the production of barley. Antonio's opportunity cost of producing 1 bushel of barley is…Both Geppetto and Lewis are toy store owners. They decide that they would like to trade puzzles and puppets in order to better stock their toy store shelves. The table below compares their production possibilities schedules Production Possibilities Schedules Geppetto Puzzles 80 64 48 32 16 0 Puppets 0 Geppetto: 10 20 30 40 50 Puzzles 50 40 30 20 10 8 puzzles and Lewis Puppets e Instructions: Enter your answers as a whole number. a. Geppetto and Lewis agree to trade at a rate of 3 puzzles for each puppet. With those terms of trade, who is most likely to be the supplier of puzzles? Who is most likely to be the supplier of puppets? Puzzles (Click to select)) Puppets: (Click to select) b. The two toy store owners agree to specialize and to trade 30 puzzles for 10 puppets. The terms of trade are still 3 puzzles for each puppet. How many puzzles and puppets will each one have after they complete their trade? Lewis puzzles and puppets 30 45 60 75 90 puppetsComparative and absolute advantage Elijah and Aneesha are farmers. Each one owns an 18-acre plot of land. The following table shows the amount of squash and maize each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing squash or maize or to produce squash on some of the land and maize on the rest. Squash Maize (Pounds per acre) (Pounds per acre) Elijah 12 3 Aneesha 18 6 On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Aneesha's PPF. Elijah's PPF Aneesha's PPF 0 90 180 270 360 450 540 630 720 810 900 180 162 144 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Suppose that Yosemite and Congaree agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 6 million pounds of corn for 6 million pounds of lentils. This ratio of goods is known as the price of trade between Yosemite and Congre The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A Place a black point (plus symbol) on the graph to indicate Yosemite's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. LENTILS (MEs of pounds) Youmite 12 Consumption Aer Trade (?)The New York Times (Nov. 30, 1993) reported that “the inability of OPEC to agree last week to cut production has sent the oil market into turmoil . . . [leading to] the lowest price for domestic crude oil since June 1990.” Statements True False The members of OPEC were trying to agree to cut production so they could save more oil for the future. OPEC was unable to agree on cutting production because each country has an incentive to cheat on any agreement. The newspaper also noted OPEC's view “that producing nations outside the organization, like Norway and Britain, should do their share and cut production.” What does the phrase “do their share” suggest about OPEC's desired relationship with Norway and Britain? OPEC would like Norway and Britain to act competitively. OPEC would like Norway and Britain to keep their production levels high. OPEC would like Norway and Britain to join the cartel.u work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashies, flopsicles, and mookies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashies increases by 4%, the quantity of flopsicles sold increases by 1% and the quantity of mookies sold decreases by 5%. Your job is to use the cross-price elasticity between splishy splashies and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the…
- Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use thier their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following questions: a) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? b) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? c) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hamburger? Why or why not?Rafael's PPF Naomi's PPF 30 30 25 25 20 20 A 15 15 10 10 A 5 10 15 20 25 30 10 15 20 25 Rackets Rackets Refer to the diagrams above. Suppose that before trading, Rafael and Naomi had been producing at point A on their respective PPF. Then suppose they choose to specialize and trade. After specializing they trade 8 Rackets for 8 Balls. After this trade, Rafael will consume and Select one: а. 20 Rackets; 8 Balls b. 8 Rackets; 8 Balls C. 8 Rackets; 12 Balls d. 12 Rackets; 8 Balls Balls Balls 30Both Geppetto and Lewis are toy store owners. They decide that they would like to trade puzzles and puppets in order to better stock their toy store shelves. The table below compares their production possibilities schedules. Production Possibilities Schedules Geppetto Lewis Puzzles Puppets Puzzles Puppets 80 0 30 0 64 4 24 4 48 8 18 8 32 12 12 12 16 16 6 16 0 20 0 20 Instructions: Enter your answers as a whole number. a. Geppetto and Lewis agree to trade at a rate of 3 puzzles for each puppet. With those terms of trade, who is most likely to be the supplier of puzzles? Who is most likely to be the supplier of puppets? Puzzles: Geppetto Puppets: Lewis b. The two toy store owners agree to specialize and to trade 30 puzzles for 10 puppets. The terms of trade are still 3 puzzles for each puppet. How many puzzles and puppets will each one have after they complete their trade? Lewis: puzzles and puppets Geppetto: puzzles and puppets Geppetto Lewis Puzzles Puppets Puzzles Puppets 80 64 48 32…
- Consider two neighboring island countries, Charisma and Fiatstan. Each has 72,000 labor hours available per week that it can use to produce corn, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of com or 1 pair of jeans. Corn Jeans Country (Labor hours per bushel) (Labor hours per pair) Charisma 80 16 Fiatstan 24 12 has an absolute advantage in the production of corn, and has an absolute advantage in the production of jeans. Initially, suppose Charisma uses 54,000 hours of labor per week to produce corn and 18,000 hours per week to produce jeans, while Fiatstan uses 18,000 hours of labor per week to produce corn and 54,000 hours per week to produce jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries, each country consumes the amount of corn and jeans it produces. Charisma's opportunity cost of producing 1 bushel of corn is of jeans, and Fiatstan's…Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Dolorium 5 20 Contente 8 16 Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Dolorium uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Dolorium produces 15 million bushels of rye and 20 million pairs of jeans, and Contente produces 8 million bushels of rye and 48 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans…When a country has a comparative advantage in the production of a god, t means that it can produce this good at a lomer opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desania. Both countries produce lemons and tea, each intialy (i.e, befare spedialization and trade) producing 24 million pounds of lemons and 12 milion pounds of tea, as indicated by the grey stars marked with the letter A. Maldonia Desonia 40 24 PPF 2 41 s LEMONS (Miliona of pounda) 16 34 2 4 16 34 LEMONS (Mona of pounda) Maldonia has a comparative advantage in the production of . while Desonia has a comparative advantape in the ▼ . Suppose that Maidonia and Desonia specialize in the production of the goods in which each has a comparative advantage. Alter specialization, the two countries can produce a total of 45 milion pounds of tea and48…