If countries X and Y produce only either baseballs or golf balls, their maximum outputs are shown in the accompanying production possibilities schedules. Country Baseballs Golf balls X 100 300 Y 50 200 Which of the following is true?
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Q1. Country A's production possibility frontier is given by the equation X2 + Y2 = 200. Country B's production possibility frontier is given by the equation X + Y = 100. Choose the correct statement. 1. For any given X < 100 same for both countries, country A can produce less of good Y than country B. 2. If the countries want to produce 60 units of X together, the maximum possible amount of Y that they can produce together equals approximately 54. 3. The opportunity cost of producing an additional unit of X is equal between the countries at all points of their PPFs. 4. If the countries join their production possibilities, their PPF will be given by X2 + X + Y2 + Y = 300.
Breanna O.
To the right are hypothetical production possibilities tables for New Zealand and Spain. Each country can produce apples and plums. Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following: a. What is each country's cost ratio of producing plums and apples. b. Which nation should specialize in which product? New Zealand’s Production Possibilities Table (Millions of Bushels) $$\begin{array}{|lccc|} \hline {} & {} & {\text { Production Alternatives }} \\ \hline \text { Product } & \mathbf{A} & \mathbf{B} & \mathbf{C} & \mathbf{D} \\ \hline \text { Apples } & 0 & 20 & 40 & 60 \\ \text { Plums } & 15 & 10 & 5 & 0 \\ \hline \end{array}$$ Spain’s Production Possibilities Table (Millions of Bushels) $$\begin{array}{|lcccc|} \hline & {\text { Production Alternatives }} \\\text { Product } & \mathbf{R} & \mathbf{S} & \mathbf{T} & \mathbf{U} \\ \hline \text { Apples } & 0 & 20 & 40 & 60 \\ \text { Plums } & 60 & 40 & 20 & 0 \\ \hline\end{array}$$ c. Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples. (Plot these lines on your graph.) d. Suppose the optimum product mixes before specialization and trade were alternative $\mathrm{B}$ in New Zealand and alternative $S$ in Spain. What would be the gains from specialization and trade?
The table below shows the number of units of labor required to produce one unit of X and Y, respectively, in two countries, A and B, each operating under Classical Ricardian conditions: Goods | Country A | Country B X | 0.10 | 0.25 Y | 0.20 | 0.40 a. Which country has an absolute advantage in the production of X? b. Should country would you recommend to be the exporter of Y? c. What is the pre-trade opportunity cost of producing one unit of X, measured in terms of Y, in country B? d. Create a new table showing each country's output of X and Y per unit of labor input used. e. Draw a graph showing country A's production function for good X?
Rashmi S.
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