1. If the US has 100,000 hours available to produce 2 goods computer which takes 25...
1. If the US has 100,000 hours available to produce 2 goods computer which takes 25 hours per computer to produce and pickup trucks which takes 500 hours per truck. If Brazil has 75,000 hours available to produce 2 goods computers which take 30 hours per computer to produce and pickup truck which takes 600 hours to produce per truck.
a. Draw the PPF diagram for the US assume they consume half of each product without trade. Demonstrate all relevant points.
b. Draw the PPF diagram for Brazil assume they consume half of each product without trade. Demonstrate all relevant points.
c. Is there a basis for trade between US and Brazil? If so what is the economic theory for the basis of trade?
d. If they trade and the terms of trade are 35 computers for 525 trucks, demonstrate and prove the gains from trade.
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