Pants (per day) 5 4 3 2 1 Miyah's PPF Derek's PPF 1 2 3 4 5 6 Shirts (per day)
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Opportunity cost is what you give up in order to produce something else. In the context of a Production Possibilities Curve (PPC), it's the amount of one good that must be given up to produce more of another good. Comparative advantage occurs when one party can Show more…
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Suppose that in a year an American worker can produce 100 shirts or 20 computers and a Chinese worker can produce 100 shirts or 10 computers. a. For each country, graph the production possibilities frontier. Suppose that without trade the workers in each country spend half their time producing each good. Identify this point in your graphs. b. If these countries were open to trade, which country would export shirts? Give a specific numerical example and show it on your graphs. Which country would benefit from trade? Explain. c. Explain at what price of computers (in terms of shirts) the two countries might trade. d. Suppose that China catches up with American productivity so that a Chinese worker can produce 100 shirts or 20 computers. What pattern of trade would you predict now? How does this advance in Chinese productivity affect the economic wellbeing of the two countries' citizens?
Visualize a straight down-slope PPF (Production Possibility Frontier/Curve) for two countries the United States and Taiwan. Both countries produce YO-YOs and Tennis Shoes. The PPF for the United States shows that on the Y-Axis its Output for YO-YOs is 100 million (per year) and X-Axis its Output for Tennis Shoes is 25 million (per year). The PPF for Taiwan shows that on the Y-Axis its Output for YO-YOs is 20 million (per year) and X-Axis its Output for Tennis Shoes is 10 million (per year). Considering the PPFs for both countries, the opportunity cost of producing 1 YO-YO in Taiwan is: Answers: A. 2 pairs of tennis shoes. B. One-half of a yo-yo. C. Greater than the opportunity cost in the United States. D. Equal to the opportunity cost of producing 1 yo-yo in the U.S.
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The graph below shows Tanya's weekly production possibilities frontier for doing homework (writing papers and doing problem sets). The vertical intercept (point A) is 16, and the horizontal intercept (point B) is 4. a. The slope of the production possibilities frontier is b. The opportunity cost of doing one problem set is c. The opportunity cost of writing one paper is
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