User Account

All Pages

Constant opportunity cost conditions

Assignment Help Macroeconomics
Reference no: EM131112990

Suppose countries A and B each have 1000 units of Labor available. Countries A and B can produce two goods, steel and TVs, using the following labor coefficients (labor requirements) per unit of output produced:

Steel (S) TV's (T)

A 1 2

B 1 1

All production occurs under constant opportunity cost conditions (Ricardian technology).

i) Draw the production possibility frontiers (PPF's) of the two countries. Explain. (Place Steel on the horizontal axis.)

ii) Which country has an absolute advantage in steel production? TV production? Which country has a comparative advantage in steel? TV's? Explain.

Therefore, if A and B trade, which country exports steel? TV's? Explain.

iii) In what range must the international relative price of steel (PSteel/PTV) fall in order for trade to take place between A and B? Explain.

iv) Suppose that Country A produces and consumes 250 TV's and 500 units of steel in autarky (no international trade) and Country B produces and consumes 500 TV's and 500 units of steel in autarky. When A and B trade, by how much will world production of steel and TV's change as a result of the trade? Explain.

Reference no: EM131112990

Questions Cloud

Explain the security levels of the prisons : Describe the problems associated with the prisons used to incarcerate these individuals. Explain the security levels of the prisons.
What is the change in kinetic energy of the object : An object of mass 1000 kg, initially having a velocity of 100 m/s, decelerates to a final velocity of 20 m/s. What is the change in kinetic energy of the object, in kJ?
Review of china trade policies : Review of China Trade Policies, 1970-2014
Determine the force in each member of the truss : Determine the force in each member of the truss. State if the members are in tension or compression. Take that P = 550lb .Show transcribed image text Determine the force in each member of the truss. State if the members are in tension or compressio..
Constant opportunity cost conditions : Suppose countries A and B each have 1000 units of Labor available. Countries A and B can produce two goods, steel and TVs, using the following labor coefficients (labor requirements) per unit of output produced:
How can the logistics processes be improved : How can the logistics processes be improved in your organization(Starbucks)?
Summary of the history of state and federal prisons : Write a 700- to 1,050-word, double spaced paper using the information found in the CJi Interactive Multimedia and this week's readings. Include the following in your paper: A description of jail's place in corrections and its role throughout histo..
What conclusions can you draw from your calculation : What is percent reduction in shaft weight? What conclusions can you draw from your calculation?
Algebraic sign of the elasticity of demand : Why do economists pay little attention to the algebraic sign of the elasticity of demand for a good with respect to its own price, yet careful attention to the algebraic sign of the elasticity of demand for a good with respect to another goods pri..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Why a monopolist will never produce a quantity

Explain why a monopolist will never produce a quantity at which the demand curve is inelastic - hint - if demand is inelastic and the firm raises its price, what happens to total revenue and total costs?

  Discuss the three important factors for growth

Discuss the 3 important factors for growth and explain how a given society can accumulate capital?

  Analyzing the price system in medical service substitution

Is the price system a "just" or "fair" way to allocate products: What about medical Services-What are substitution and income effects related to the Law of Demand?

  Outsourcing decisions made by us companies

Determine the pros and cons of the following consequences of outsourcing decisions made by United States firms in response to increasing globalization and tougher competition in marketplace.

  What president roosevelt might have been trying to achieve

In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer.

  How much juice will the costumer purchase in a month

how much juice will the costumer purchase in a perticular month. What is the elasticity of demand for juice.

  What is the marginal rate of substitution between a and b

Susie is at the grocery store buying milk. She has a choice between milk from Dairy A or milk from Dairy B. She doesn't actually care at all which dairy her milk comes from. (a) Draw a possible indifference curve for Susie between milks A and B.

  Determinants of expenditure

a. Briefly describe the two main variables in the investment demand function and how they are related to Investment Expenditure. b. List the basic determinants of expenditure and describe how they affect investment.

  Discussion on externalities

Assume the United States government determines that the cigarette smoking creates social expenses not reflected in current price of cigarettes in the market.

  What is the resulting equilibrium price and quantity

If the industry is regulated and the regulatory authority forces Widget Corp. to earn only a normal return on investment (which is included in its cost function), what is the resulting equilibrium price and quantity. What happens to consumer surpl..

  Explain why both nations with high living standards and

Explain why both nations with high living standards and nations with low living standards face the problem of scarcity. If you won $1 million in a lottery, would you escape the scarcity problem?

  Draw the effects of a recession caused by a decrease

Use the (Keynesian) AD-AS model to answer the following questions.Draw the effects of a recession caused by a decrease in aggregate demand.  For simiplicity, assume that your economy starts at general equilibrium.  Label your graph carefully.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd