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Directions: Write clear and complete answers to the following questions on your own paper. Show your work and put a box around your final answers. Feel free to collaborate. 1. Suppose that the United States and Canada both produce maple syrup and honey. The following tables show the various combinations of these two products that each country can produce in a day given the same amounts of capital and labor: Canada Honey Maple Syrup (tons) (tons) 0 60 10 45 20 30 30* 40 15* 0 United States Honey Maple Syrup (tons) (tons) 0 50 10* 40* 20 30 30 20 40 10 50 0 a. For what item(s) does Canada have an absolute advantage? Explain. b. Draw the production possibilities curves for each person on separate diagrams. Place honey (tons/yr.) on the vertical axis and maple syrup (tons/yr.) on the horizontal axis. Honey Honey 70 60 50 40 30 20 10 10 20 30 40 50 60 Syrup 10 20 30 40 50 60 Syrup c. What does it cost each country to produce one ton of maple syrup? d. In what line of production does Canada have a comparative advantage? Explain. Suppose that without trade each person produces and consumes the combination marked with a *. Mark these points on your PPCs with the letter "A." Alternatively, suppose that each individual specializes completely in the production of the good for which he has a comparative advantage. Mark these combinations also on your PPC with the letter "B." e. How would the production of each good change when specialization occurs? That is, how much more of each good is produced when there is specialization? f. Give an example of the mutually beneficial terms of trade. That is, if they specialize, at what rate would it be beneficial for Canada and the United States to trade honey for maple syrup and vice versa? Explain your answer. Directions: Write clear and complete answers to the following questions on your own paper. Show your work and put a box around your final answers. Feel free to collaborate. 1. Suppose that the United States and Canada both produce maple syrup and honey. The following tables show the various combinations of these two products that each country can produce in a day given the same amounts of capital and labor: Canada Honey Maple Syrup (tons) (tons) 0 60 10 45 20 30 30* 40 15* 0 United States Honey Maple Syrup (tons) (tons) 0 50 10* 40* 20 30 30 20 40 10 50 0 a. For what item(s) does Canada have an absolute advantage? Explain. b. Draw the production possibilities curves for each person on separate diagrams. Place honey (tons/yr.) on the vertical axis and maple syrup (tons/yr.) on the horizontal axis. Honey Honey 70 60 50 40 30 20 10 10 20 30 40 50 60 Syrup 10 20 30 40 50 60 Syrup c. What does it cost each country to produce one ton of maple syrup? d. In what line of production does Canada have a comparative advantage? Explain. Suppose that without trade each person produces and consumes the combination marked with a *. Mark these points on your PPCs with the letter "A." Alternatively, suppose that each individual specializes completely in the production of the good for which he has a comparative advantage. Mark these combinations also on your PPC with the letter "B." e. How would the production of each good change when specialization occurs? That is, how much more of each good is produced when there is specialization? f. Give an example of the mutually beneficial terms of trade. That is, if they specialize, at what rate would it be beneficial for Canada and the United States to trade honey for maple syrup and vice versa? Explain your answer.
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Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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