Which country has the comparative advantage in production

Assignment Help Financial Management

Reference no: EM132004546

Suppose that Country A can produce either 8 units of food or 4 cars in one day; while country B can produce either 12 units of food or 4 cars in one day.

a) If there is no specialization and no trade, assuming each country spends half a day in the production of food and half a day in the production of cars, what would World production be?

10 units of food and 4 cars

b) Which country has the comparative advantage in the production of cars? Which country has the comparative advantage in the production of food?

Country A has a comparative advantage in the production of cars. Country B has a comparative advantage in the production of food.

c) If these countries specialize and trade, what would World production be?

12 units of food and 4 cars.

Reference no: EM132004546

Questions Cloud

Compute amount of gross profit to be recognized each year : On March 1, 2012, Chance Company entered into a contract to build an apartment building. Compute the amount of gross profit to be recognized each year

Find the cost of equity for a a steady growth : There has been a steady growth in dividends of 4% per year and the market expects that to continue. The current price is $20. What is the cost of equity?

Determining the steady-state and peak demand : Wal-marts network sourcing strategy and know whether or not the number and quality of suppliers is the optimal mix for the operation.

What is the difference in the annual inflation rates : Suppose the current exchange rate for the Russian ruble is RUB 34.59. The expected exchange rate in three years is RUB 37.69.

Which country has the comparative advantage in production : Suppose that Country A can produce either 8 units of food or 4 cars in one day; while country B can produce either 12 units of food or 4 cars in one day.

Demand of customers during steady-state : What is Wal-mart's suppliers in terms of their abilities to meet the demand of customers during steady-state and peak operations.

Which company do you think will have a higher stock price : Suppose company A has just paid $2 in dividends and company B just paid $2.50 in dividends; which company do you think will have a higher stock price?

Landscape to achieve a more competitive advantage : In the case of Best Buy what do you think the company should do in terms of generating more funds especially in the e-commerce landscape to achieve

How many of the zeroes would you need to issue : How many of the coupon bonds would you need to issue to raise the $36.7 million?How many of the zeroes would you need to issue?

User Account

All Pages