Both the U.S. and Mexico only need labor to produce computers and beer. Suppose that workers...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Both the U.S. and Mexico only need labor to produce computers and beer. Suppose that workers in the U.S. need 5 hours to assemble a computer and 2 hours to produce one case of beer, while workers in Mexico need 10 hours to assemble a computer and 1 hour to produce one case of beer. The U.S. has 10 million labor hours available to use in production each month. Mexico also has 10 million labor hours available for production per month. For simplicity, assume that opportunity costs are constant for both countries. i. Plot the Production Possibilities Frontier (PPF) of the U.S. and Mexico for computers and beers. Place computers in the horizontal axis for both countries. Make sure you mark clearly the x-intercept and y-intercept for each PPF in your graphs. Be consistent using units of account. What is the opportunity cost of producing one computer for the U.S.? And for Mexico? What is the opportunity cost of producing one case of beer for the U.S.? And for Mexico? ii. Suppose both the US and Mexico allocate half their available hours of work to the production of computers and half to the production of beer. If both countries are self-sufficient (i.e. there is no trade), how many computers and cases of beer will the US be able to consume? How many computers and cases of beer will Mexico be able to consume? Make your calculations explicit and mark this point clearly in each country's PPF. Explain briefly in words. iii. Which country has the absolute advantage in producing computers? Which country has the absolute advantage in producing beers? Explain your answer in words and with numbers. iv. Which country has the comparative advantage in producing computers? Which country has the comparative advantage in producing beers? What product(s) should the US specialize in? What product(s) should Mexico specialize in? Explain your answer in words and with numbers. Both the U.S. and Mexico only need labor to produce computers and beer. Suppose that workers in the U.S. need 5 hours to assemble a computer and 2 hours to produce one case of beer, while workers in Mexico need 10 hours to assemble a computer and 1 hour to produce one case of beer. The U.S. has 10 million labor hours available to use in production each month. Mexico also has 10 million labor hours available for production per month. For simplicity, assume that opportunity costs are constant for both countries. i. Plot the Production Possibilities Frontier (PPF) of the U.S. and Mexico for computers and beers. Place computers in the horizontal axis for both countries. Make sure you mark clearly the x-intercept and y-intercept for each PPF in your graphs. Be consistent using units of account. What is the opportunity cost of producing one computer for the U.S.? And for Mexico? What is the opportunity cost of producing one case of beer for the U.S.? And for Mexico? ii. Suppose both the US and Mexico allocate half their available hours of work to the production of computers and half to the production of beer. If both countries are self-sufficient (i.e. there is no trade), how many computers and cases of beer will the US be able to consume? How many computers and cases of beer will Mexico be able to consume? Make your calculations explicit and mark this point clearly in each country's PPF. Explain briefly in words. iii. Which country has the absolute advantage in producing computers? Which country has the absolute advantage in producing beers? Explain your answer in words and with numbers. iv. Which country has the comparative advantage in producing computers? Which country has the comparative advantage in producing beers? What product(s) should the US specialize in? What product(s) should Mexico specialize in? Explain your answer in words and with numbers.
Expert Answer:
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
Students also viewed these economics questions
-
The conservative financing strategy results in financing all projected funds requirements with and use of event of an unexpected cash outflow. Select one: funds funds in the a. short-term; long-term...
-
What is the opportunity cost of producing an additional unit of entertainment? Explain how the opportunity cost of a unit of entertainment changes as more entertainment is produced. The people of...
-
What is Toms opportunity cost of producing a racket? What is Abbys opportunity cost of a racket? Who has a comparative advantage in producing rackets? Who has a comparative advantage in producing...
-
Another liability that employers have is that of unemployment insurance. Class, let's talk about this a little more. At what levels are unemployment liabilities incurred? What are some additional...
-
What is the importance of positioning with respect to marketing and the development of a marketing strategy?
-
Sprague Company has been operating for several years, and on December 31, 2025, presented the following balance sheet. The net income for 2025 was $25,000. Assume that total assets are the same in...
-
With reference to Exercise 11.16, fit a straight line to the data by the method of least squares, using \(M_{\text {ext }}\) as the independent variable, and draw its graph on the diagram obtained in...
-
Cost classification and target profit Walts Woodwork Company makes and sells wooden shelves. Walts carpenters make the shelves in the companys rented building. Walt has a separate office at another...
-
We look at the detective novel market. Information gathered through a survey was used to Determine the following demand function and supply function: = 160-4 = 2-20 Graphically represent this console...
-
Use the following graph for Yolanda's Frozen Yogurt Stand to answer the questions on the next page. a. Use the midpoint formula to calculate the price elasticity of demand for D1 between point A and...
-
Find the following indefinite integrals using u-substitution: a) f39ex e13x - 9dx Find the following indefinite integrals: b) 20 sech (5x) (4 + tanh(5x))4 dx Consider the region bounded by y = 3,...
-
The isotopes magnesium-24 (mass \(3.983 \times 10^{-26} \mathrm{~kg}\) ) and magnesium-26 (mass \(4.315 \times 10^{-26} \mathrm{~kg}\) ) are to be separated using a mass spectrometer in which the...
-
Examine attributes and operations of dignity. Are there any missing attributes and operations? Discuss them.
-
How does competition qualify as a subject for a stable analysis pattern?
-
Is the trust pattern incomplete without the use of other patterns? Explain briefly.
-
An electron that has been accelerated through a \(100-\mathrm{V}\) potential difference moves in a circular orbit perpendicular to a uniform magnetic field of magnitude 0.4 T. For this electron,...
-
Assume that Kristi Corporation issued a 1 0 % , $ 1 , 0 0 0 , 0 0 0 bond due in 5 years on January 1 , Year 1 . The bond was priced to yield 8 % . Interest is paid semiannually on June 3 0 and...
-
Using the parallel-axis theorem, determine the product of inertia of the area shown with respect to the centroidal x and y axes. 6 in. 9 in. 9 in- 4.5 in. in. 4.5 in.
-
Another type of random sample is called a bootstrap sample. Given a data set with n observations, a bootstrap sample, also of size n, is when you randomly sample from the data set with replacement....
-
A homeowner wants to decide whether he should install an electronic heat pump in his home. Given that the cost of installing a new heat pump is fairly large, the homeowner wants to do so only if he...
-
A technical note in the discussion of @RISK indicated that Latin Hypercube sampling is more efficient than Monte Carlo sampling. This problem allows you to see what this means. The file S15_44.xlsx...
-
Explain the term Energy. Discuss its various forms.
-
Explain cyclic and quasi static process.
-
Explain the terms : state, phase, process and cyclic process.
Study smarter with the SolutionInn App