1) American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers.
a. For this situation, construct a table analogous to the table in Figure 1.
b. Graph the production possibilities frontier of the American and Japanese economies.
c. For the United States, what is the opportunity cost of a car? Of grain? For japan, what is the opportunity cost of a car? Of grain? Put this information in a table analogous to Table 1.
d. Which country has an absolute advantage in producing cars? In producing grain?
e. Which country has a comparative advantage in producing cars? In producing grain?
f. Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce?
g. Starting from a position without trade, give an example in which trade makes each country better off.
2) The market for pizza has the following demand and supply schedules:
Price Quantity Demanded Quantity supplied
$4.00 135 26
$5.00 104 53
$6.00 81 81
$7.00 68 98
$8.00 53 110
$9.00 39 121
a. Graph the demand and supply curves. What is the equilibrium price and quantity in this market?
b. If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?
c. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium?
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]