> The following figures represent the amount that can be produced with a fixed amount of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
> The following figures represent the amount that can be produced with a fixed amount of factor inputs. Panama Honduras Bananas 100 160 Sugarcane 50 40 A. Which country has the absolute advantage in bananas? Which country has the absolute advantage in sugarcane? Explain numerically how you arrive at that answer? /3) B. What is Panama's opportunity cost for producing one unit of bananas? What is Honduras's opportunity cost for producing one unit of sugarcane? ( _/2) C. Which country has the comparative advantage in bananas? Which country has the comparative advantage in sugarcane? Should these countries trade? If so, how? (__ /4) D. Identify a terms of trade that benefits both countries? Explain why this will benefit Panama /3) 5. ( /12) Sam and Phil are roommates. They spend most of their time studying (of course!), but they like to spend some time for their favourite activities: making pizza and brewing huckleberry wine. Sam takes 4 hours to brew a gallon of huckleberry wine and 2 hours to make a pizza. Phil takes 6 hours to brew a gallon of huckleberry wine and 4 hours to make a pizza. 6. ( A. ( A. What is each roommates' opportunity cost of making a pizza? Who has the absolute advantage in making pizza? Who has the comparative advantage in making pizza?. (_ /4) B. If Sam and Phil trade foods with each other, who will trade away pizza in exchange for huckleberry wine? Explain. ( 13) C. The price of pizza can be expressed in terms of gallons of huckleberry wine. What is the highest price at which pizza can be traded that would make both roommates better off? What is the lowest price? Explain. ( /5) /11) Opportunity Cost, Positive vs Normative Statements, and Perverse Incentives 3) You win $100 in a basketball pool. You have a choice between spending the money now or putting it in a bank paying at 5% interest per annum. What is the opportunity cost of spending the $100 now? Explain, first defining opportunity cost. B. ( /4) Classify the following statements as either normative or positive statements: i. Society ought to require welfare recipients to take drug tests before getting government help. ii. 2+2=5 iii. Scarcity requires us to make trade-offs amongst competing options. iv. The Federal Reserve should increase the money supply and spur inflation. C. ( 4) The Social Security system provides income for people over age 65. If a recipient of Social Security decides to work and earn some income, the amount he or she receives in Social Security benefits is typically reduced. i. How does the provision of Social Security affect people's incentive to save whilst working? Explain. ii. How does the reduction in benefits associated with higher earnings affect people's incentive to work past age 65? Explain. > The following figures represent the amount that can be produced with a fixed amount of factor inputs. Panama Honduras Bananas 100 160 Sugarcane 50 40 A. Which country has the absolute advantage in bananas? Which country has the absolute advantage in sugarcane? Explain numerically how you arrive at that answer? /3) B. What is Panama's opportunity cost for producing one unit of bananas? What is Honduras's opportunity cost for producing one unit of sugarcane? ( _/2) C. Which country has the comparative advantage in bananas? Which country has the comparative advantage in sugarcane? Should these countries trade? If so, how? (__ /4) D. Identify a terms of trade that benefits both countries? Explain why this will benefit Panama /3) 5. ( /12) Sam and Phil are roommates. They spend most of their time studying (of course!), but they like to spend some time for their favourite activities: making pizza and brewing huckleberry wine. Sam takes 4 hours to brew a gallon of huckleberry wine and 2 hours to make a pizza. Phil takes 6 hours to brew a gallon of huckleberry wine and 4 hours to make a pizza. 6. ( A. ( A. What is each roommates' opportunity cost of making a pizza? Who has the absolute advantage in making pizza? Who has the comparative advantage in making pizza?. (_ /4) B. If Sam and Phil trade foods with each other, who will trade away pizza in exchange for huckleberry wine? Explain. ( 13) C. The price of pizza can be expressed in terms of gallons of huckleberry wine. What is the highest price at which pizza can be traded that would make both roommates better off? What is the lowest price? Explain. ( /5) /11) Opportunity Cost, Positive vs Normative Statements, and Perverse Incentives 3) You win $100 in a basketball pool. You have a choice between spending the money now or putting it in a bank paying at 5% interest per annum. What is the opportunity cost of spending the $100 now? Explain, first defining opportunity cost. B. ( /4) Classify the following statements as either normative or positive statements: i. Society ought to require welfare recipients to take drug tests before getting government help. ii. 2+2=5 iii. Scarcity requires us to make trade-offs amongst competing options. iv. The Federal Reserve should increase the money supply and spur inflation. C. ( 4) The Social Security system provides income for people over age 65. If a recipient of Social Security decides to work and earn some income, the amount he or she receives in Social Security benefits is typically reduced. i. How does the provision of Social Security affect people's incentive to save whilst working? Explain. ii. How does the reduction in benefits associated with higher earnings affect people's incentive to work past age 65? Explain.
Expert Answer:
Related Book For
Macroeconomics Principles And Policy
ISBN: 9780324586213
11th Edition
Authors: William J. Baumol, Alan S. Blinder
Posted Date:
Students also viewed these economics questions
-
The following table shows the hourly output per worker in two industries in Chile and Argentina. a. Explain which country has an absolute advantage in the production of hats and which country has an...
-
MCQ questions: 1. An increase in oil prices, such as the oil shocks in the 70s, lead to _______ thereby causing ________ a movement along the AS curve; cost-push inflation a leftward shift in the AS...
-
Show that for a linear ODE y' + p(x)y = r(x) with continuous p and r in |x - x 0 | < a Lipschitz condition holds. This is remarkable because it means that for a linear ODE the continuity of f(x, y)...
-
Why might a PCT applicant enter Chapter II and request an international preliminary examination even though an international search report and written opinion were provided in Chapter I?
-
Two people differ in age by 1.5 years. Their heights and weights are the same, and their lung capacities are measured at the same pressure and temperature. By how much should we predict their lung...
-
A large retailer reported revenue of $1,665,000. The companys gross profit percentage was 44 percent. What amount of cost of goods sold did the company report?
-
Discuss the justification and how to measure the ROI of social commerce and the risk factors and implementation issues associated with social commerce and how to build a strategy for success in...
-
West Coast Hotel has 1 5 0 rooms. The occupancy rate varies between 5 0 % and 9 0 % per month, but the average occupancy rate is generally 8 0 % . In other words, on average, 8 0 % of the hotel s...
-
Depending on which of Exercises 7 through 12 you have completed, determine the overall factor of safety of one or more of the following structures. Assume steel members with a yield strength of S Y =...
-
In 2009, the inflation rate reached negative 0.4 percent while the unemployment rate hit 10 percent. If the target inflation rate was 2 percent and the full-employment rate of unemployment was 5...
-
Depending on which of Exercises 7 through 12 you have completed, determine the required crosssectional areas of the members comprising one or more of the following structures. Assume steel members...
-
UniCom produces a wide range of consumer electronics. UniComs Newark, New York, plant produces two types of cordless phones: 2.4 GHz and 6.0 GHz. The following table summarizes operations at the...
-
In 2018, many unskilled workers in the United States earned the federal minimum wage of $7.25 per hour. By contrast, average earnings in 2018 were about $27 per hour, and certain highly skilled...
Study smarter with the SolutionInn App