Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 2, Problem 7SPA
(a)
To determine
Identify the value of the
(b)
To determine
Identify the value of the opportunity cost of producing a cap by T.
(c)
To determine
Identify the
(d)
To determine
Identify the gains from the specialization and trade.
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Students have asked these similar questions
12. In an hour, Sue can produce 40 caps or 4 jackets
and Tessa can produce 80 caps or 4 jackets.
a. Calculate Sue's opportunity cost of producing
a cap.
b. Calculate Tessa's opportunity cost of produc-
ing a cap.
c. Who has a comparative advantage in produc-
ing caps?
d. If Sue and Tessa specialize in producing the
good in which each of them has a compara-
tive advantage, and they trade 1 jacket for
15 caps, who gains from the specialization
and trade?
A worker in country A can produce either 5 computers or 45 tons of rice, while a worker in country B canproduce either 7 computers or 42 tons of rice.
a. Graph the production possibilities curve for each country. On which point of the curve would eachcountry produce if the workers spent half of their time producing each good?
b. Which country has absolute advantage? Which country has comparative advantage? In theproduction of rise Country A absolute advantage
c. If there was trade, which country would specialize in the production of rice?
d. At what price of computers would the countries agree to trade?
Points on Production Possibilities Frontier
Canada
China
Wheat
Computers
Wheat
Computers
A
150
0
90
0
B
100
25
60
60
C
50
50
30
120
D
0
75
0
180
Draw the production possibilities graph for Canada and China and label all of the points on the graph.
For which good does Canada have a comparative advantage?
For which good does China have a comparative advantage?
If Canada and China decide to specialize and trade, how many more computers and bushels of wheat would be available for consumption by both countries? Show the increase on your graphs.
Canada and China decide to impose trade restrictions in the form of a tariff on the computers and wheat. What are the costs or benefits to the consumer, producer and government for each country?
Chapter 2 Solutions
Macroeconomics
Ch. 2.1 - Prob. 1RQCh. 2.1 - Prob. 2RQCh. 2.1 - Prob. 3RQCh. 2.1 - Prob. 4RQCh. 2.1 - Prob. 5RQCh. 2.1 - Prob. 6RQCh. 2.2 - Prob. 1RQCh. 2.2 - Prob. 2RQCh. 2.2 - Prob. 3RQCh. 2.2 - Prob. 4RQ
Ch. 2.2 - Prob. 5RQCh. 2.3 - Prob. 1RQCh. 2.3 - Prob. 2RQCh. 2.3 - Prob. 3RQCh. 2.3 - Prob. 4RQCh. 2.3 - Prob. 5RQCh. 2.3 - Prob. 6RQCh. 2.3 - Prob. 7RQCh. 2.4 - Prob. 1RQCh. 2.4 - Prob. 2RQCh. 2.4 - Prob. 3RQCh. 2.4 - Prob. 4RQCh. 2.4 - Prob. 5RQCh. 2.4 - Prob. 6RQCh. 2.4 - Prob. 7RQCh. 2.5 - Prob. 1RQCh. 2.5 - Prob. 2RQCh. 2.5 - Prob. 3RQCh. 2 - Prob. 1SPACh. 2 - Prob. 2SPACh. 2 - Prob. 3SPACh. 2 - Prob. 4SPACh. 2 - Prob. 5SPACh. 2 - Prob. 6SPACh. 2 - Prob. 7SPACh. 2 - Prob. 8SPACh. 2 - Prob. 9SPACh. 2 - Prob. 10SPACh. 2 - Prob. 11APACh. 2 - Prob. 12APACh. 2 - Prob. 13APACh. 2 - Prob. 14APACh. 2 - Prob. 15APACh. 2 - Prob. 16APACh. 2 - Prob. 17APACh. 2 - Prob. 18APACh. 2 - Prob. 19APACh. 2 - Prob. 20APACh. 2 - Prob. 21APACh. 2 - Prob. 22APACh. 2 - Prob. 23APACh. 2 - Prob. 24APACh. 2 - Prob. 25APA
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