Draw graph of production possibility frontier of both

Assignment Help Microeconomics

Reference no: EM13455753

1. Suppose that the U.S and Japan are two Ricardian economies. Both countries can produce only two goods; automobiles and computers. The characteristics of each economy are summarized in the following table.

	Labor Productivity in Automobiles	Labor Productivity in Computers	Endowment of labor
United States	20	10	100
Japan	15	4	200

You are asked by the CEO to report the following information:

a. Graph the production possibility frontier of both countries with computers on the horizontal axis and automobiles on the vertical axis. Please label the axes and calculate the intercepts.

b. Identify absolute and comparative advantage of U.S. and Japan.

c. Suppose that these two countries engage in free trade. Identify absolute and comparative advantage. Describe the pattern of trade. Explain briefly your reasoning.

d. Suppose that the relative price of computers in terms of automobiles after trade is 3 [units (number) of automobiles per unit (number) of computers]. Using the same diagrams as in question 1a graph the consumption possibility frontier for both countries. Do both countries gain from trade?

Reference no: EM13455753

Questions Cloud

New clinical devices and technologies both diagnostic and : new clinical devices and technologies both diagnostic and therapeutic are being tested and approved in this country

Illustrate out the term ethical relativism think about an : define ethical relativism.think about an example of corrupt behavior. which corrupt behavior did you choose?is the

Explain how the four-steps of an argument was used to : use the controversial issue you selected to prepare a supporting argument and then refute your controversial

How do we rebuild trust what skills are required of leaders : how do we rebuild trust? what skills are required of leaders to create and sustain an environment that is transparent

Draw graph of production possibility frontier of both : 1. suppose that the u.s and japan are two ricardian economies. both countries can produce only two goods automobiles

Give a summary of the article as well as a description of : select an article from a consumer magazine or newspaper must have been written in the last 30 days provide link for all

Discuss a leader whom you trust and explain why you trust : discuss a leader whom you trust and explain why you trust the leader. explain how you define trust and how this leader

Explain why the technique was chosen and briefly summarize : write a 1250- to 1450-word-paper divided it into the following three partspart iselect1.discuss and choose the

Give at least three real-world illustrations of present or : biotechnology refers to the technical applications of living organisms or their functions. these applications may be

User Account

All Pages