Homework Answers
1. The country which requires fewer hours to produce a good relative to the other has an absolute advantage. Here, USA required fewer hours to produce both goods, thus the USA has an absolute advantage.
2. The opportunity of Bread per unit of wine in the USA is 2/5, while the opportunity cost of bread per unit of wine in the Philippines is 1/2.
3. In producing wine, the opportunity cost in the USA is 2.5 and the opportunity cost in the Philippines is 2. Thus, the Philippines has a lower opportunity cost in producing wine.
While from above it can be stated that the USA has a lower opportunity cost in producing wine.
4. I should produce (using the opportunity cost of wine) 2.5 units of bread to get one unit of wine in the USA.
I should produce 2 units of bread to get one unit of wine in the Philippines.
The Philippines offers cheaper wine in terms of bread.
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Instruction: Use Table A representing hypothetical production capacities of two economies in answering the followin...
Instruction: Use Table A representing hypothetical production capacities of two economies in answering the following questions....
Instruction: Use Table A representing hypothetical production capacities of two economies in answering the following questions. Assume that there are only 2 laborers in each country that works exactly 1 hour only. If each laborer (e.g. 1 laborer in each good) in each country works 1 hour in producing wine and bread, the output per country are as follows: A) Without Specailization/Pre-trade Country/Good Wine /hour or labor Bread /hour of labor Philippines 12 8 20 USA 10 1. Who has...
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1. Below is production levels of lumber and oll for the United States and Canada. Country Lumber Production (using 50 worker hours) 100 200 Oil Production (using 50 worker hours) 150 50 United States Canada a. Calculate the opportunity cost of producing 100 units of lumber for U.S. b. Calculate the opportunity cost of producing 200 units of lumber for Canada. C. Calculate the opportunity cost of producing 150 units of oil for U.S. d. Calculate the opportunity cost of...
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Answer questions 3 through 6 based on the following information: There are two countries, Home and Foreign, in a hypothetical world. Each of these two countries are Ricardian economies. Each country is endowed with 100 labor hours. Each country can use labor to produce two goods, cheese and car. The following table shows labor requirements per unit of each good in each country. Perfect competition prevails everywhere in the two-country world. Suppose that w and w*represent Home's and Foreign's hourly...
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