The following table describes the production possibilities of two cities in the country: City Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour Boston 3 3 Chicago 2 1 City Pairs of Red Socks per Worker per Hour Pairs of White Socks per Worker per Hour Boston 3 3 Chicago 2 1 a. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? b. If the cities trade with each other, which color sock will each export? c. What is the range of prices at which trade can occur?
The following table describes the production possibilities of two cities in the country:
City
Pairs of Red Socks per
Worker per Hour
Pairs of White Socks
per Worker per Hour
Boston 3 3
Chicago 2 1
| City | Pairs of Red Socks per Worker per Hour | Pairs of White Socks per Worker per Hour |
| Boston | 3 | 3 |
| Chicago | 2 | 1 |
a. Which city has an
b. If the cities trade with each other, which color sock will each export?
c. What is the range of prices at which trade can occur?
| year | price of milk | quantity of milk | price of honey | quantity of honey |
| 2016 | $1 | 100 quarts | $2 | 50 quarts |
| 2017 | 1 | 200 | 2 | 100 |
| 2018 | 2 | 200 | 4 | 100 |
a) Compute nominal
base year.
b) Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2017 and 2018 from the preceding year. For each year, identify the variable that does not change. Explain why your answer makes sense.
c) Did economic well-being increase more in 2017 or 2018? Explain
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