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Author Question: Table 2-12Digital CameraWheat (bushels)China100 hours5 hoursSouth Korea90 hours3 hoursRefer to Table ... (Read 135 times)

jasdeep_brar

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Table 2-12

Digital CameraWheat (bushels)
China100 hours5 hours
South Korea90 hours3 hours

Refer to Table 2-12. This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.

a.

Assume each country has a total of 9,000 labor hours to devote to the production of the two
goods and draw the production possibilities frontier for each country. Put "Digital Camera" on the horizontal axis and "Wheat" on the vertical axis. Be sure to identify the intercept values on your graphs.

b.

Suppose each country allocates 60% of its labor hours to wheat production and 40% to the
production of digital cameras. Complete Table 2-13 below to show each country's output of the two products.

Table 2-13: Production and Consumption with no Trade

Digital Camera OutputWheat Output (bushels)
China
South Korea
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 China's consumption point "C" and South Korea's consumption point "K".

d.

Suppose the two countries specialize and trade. Which country should produce digital cameras
and which should produce wheat? Explain your answer.

e.

Complete Table 2-14 below to show each country's output with specialization.


Table 2-14: Output with Specialization

Digital Camera OutputWheat Output (bushels)
China
South Korea
Total

f.

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

g.

Suppose China and South Korea agree to trade so that in exchange for 1,200 bushels of wheat,
the exporter of wheat receives 48 digital cameras. Complete Table 2-15 below to show each country's consumption bundle after trade.


Table 2-15: Consumption with Trade

Digital Camera Wheat (bushels)
China
South Korea

h.

Show the consumption points after trade on each country's production possibilities frontier. Label these points "B" for China and "J" for South Korea.

i.

Has trade made the two countries better off? Explain your answer.
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Marked as best answer by jasdeep_brar on Oct 5, 2019

soda0602

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jasdeep_brar

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Reply 2 on: Oct 5, 2019
Thanks for the timely response, appreciate it


smrtceo

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Reply 3 on: Yesterday
Gracias!

 

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