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Social Science Clinic => Economics => Microeconomics => Topic started by: jho37 on Oct 5, 2019

Title: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2-17. ...
Post by: jho37 on Oct 5, 2019

Table 2-17

​	One Motorcycle	One Guitar
Ireland	10 hours	2.5 hours
Scotland	9 hours	2 hours

Refer to Table 2-17. This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.

a.	Assume each country has a total of 2,700 labor hours to devote to the production of the two

goods and draw the production possibilities frontier for each country. Put "Motorcycle" on the horizontal axis and "Guitar" on the vertical axis. Be sure to identify the intercept values on your graphs.

b.	Suppose each country allocates 55% of its labor hours to guitar production and 45% to the

production of motorcycles. Complete Table 2-18 below to show each country's output of the two products.

Table 2-18: Production and Consumption with no Trade

​	Motorcycle Output	Guitar Output
Ireland	​	​
Scotland	​	​
Total	​	​

c.

If the two countries do not trade and consume whatever they produce, identify the current production and consumption point for each country on their respective production possibilities frontiers. Label Ireland's consumption point "I" and Scotland's consumption point "S".

d.	Suppose the two countries specialize and trade. Which country should produce motorcycles

and which should produce guitars? Explain your answer.

e.	Complete Table 2-19 below to show each country's output with specialization.

Table 2-19: Output with Specialization

​

Motorcycle Output

Guitar Output

Ireland	​	​
Scotland	​	​
Total	​	​

f.

Did specialization increase the combined output for the two countries without any increase in resources? If so, by how much?

g.	Suppose Ireland and Scotland agree to trade so that in exchange for 600 guitars, the exporter of

guitars receives 140 motorcycles. Complete Table 2-20 below to show each country's consumption bundle after trade.

Table 2-20: Consumption with Trade

​

Motorcycles

Guitars

Ireland	​	​
Scotland	​	​

h.

Show the consumption points after trade on each country's production possibilities frontier. Label these points "X" for Ireland and "Y" for Scotland.

i.	Has trade made the two countries better off? Explain your answer.

Title: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2-17. ...
Post by: medine on Oct 5, 2019

a.

graphic(Ch. 02:Micro Figure 2-2-86.png)

b.

Table 2-18: Production and Consumption with no Trade
Motorcycle     Output Guitar Output
Ireland         121.5         594
Scotland         135         742.5
Total         256.5      1,336.5

c. See graph in part (a)
d. Ireland should specialize in producing motorcycles because it has a lower opportunity cost of 4 guitars as opposed to Scotland's 4.5 guitars. Scotland should specialize in producing guitars because it has a lower opportunity cost of 0.22 units of a motorcycle as opposed to Ireland's 0.25 units of a motorcycle.
e.

Table 2-19: Output with Specialization
Motorcycle Output Guitar Output
Ireland          270             0
Scotland            0     1,350
Total          270     1,350

f. Yes, motorcycle output increased by 13.5 units (from 256.5 to 270) and guitar output increased by 13.5 units (from 1,336.5 to 1,350).
g.

Table 2-20: Consumption with Trade
Motorcycles Guitars
Ireland         130     600
Scotland         140     750

h. See graph in part (a).

i. Yes, trade has enabled the two countries to consume outside their PPFs. (Compare Table 2-20 with Table 2-18)

Title: Re: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2
Post by: josephine patt on Feb 28, 2021

thanks

Title: Re: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2
Post by: acarrias on Feb 22, 2022

Thank you

Title: Re: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2
Post by: Kyah Kerr on Feb 23, 2022

Thank you

Title: Re: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2
Post by: Jorge Lopez on Feb 23, 2022

Thank you!

Title: Re: Table 2-17One MotorcycleOne GuitarIreland10 hours2.5 hoursScotland9 hours2 hoursRefer to Table 2
Post by: Lilian Lim on Sep 16, 2022

thank you