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Author Question: Suppose country X can produce a personal computer at an opportunity cost of 1000 t-shirts. Assume ... (Read 83 times)

eruditmonkey@yahoo.com

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on: Jun 29, 2018
Suppose country X can produce a personal computer at an opportunity cost of 1000 t-shirts. Assume that country X has a comparative advantage in the production of t-shirts.
 
  Would country X ever agree to terms of trade with country Y such that one personal computer would be exchanged for 1100 t-shirts?

Question 2

Assume that a health spa can earn an additional 35,000 of revenue each year from advertising every day in a local newspaper. What must the additional cost of this daily advertising be to make this advertising economically rational?
 
  What will be an ideal response?


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tuate

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Reply #1 on: Jun 29, 2018
Answer to Question 1

There would be no reason for country X to agree to such terms of trade. If country X can already produce one personal computer at an opportunity cost of 1000 t-shirts why would it agree with country Y to purchase a computer for 10 higher? The answer is it would not.

Answer to Question 2

The additional cost of the daily advertising must be no more than 35,000 for the year to make advertising economically rational.


eruditmonkey@yahoo.com

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Reply 2 on: Jun 29, 2018
Excellent

strudel15

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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