Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 2, Problem 10PA
To determine
(a)
To find: which worker has an
To determine
(b)
To find: which worker has an absolute advantage in writing memos.
To determine
(c)
To find: which worker has a
To determine
(d)
To find: which worker has a comparative advantage in writing memos.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
As the manager at a local florist, you supervise two employees, Anita and Jerome. There are two tasks that need to be completed: floral arrangements and flower delivery. It takes Anita 30 minutes to finish one floral arrangement and it takes her 40 minutes to make one delivery. It takes Jerome 10 minutes to finish one floral arrangement and it takes him 30 minutes to make one delivery.
a. Who has a comparative advantage in floral arrangements? What about deliveries?
b. Suppose, initially, Jerome and Anita each spent 4 hours each day doing floral arrangements and 2 hours each day doing deliveries. If you changed their tasks so that each individual did nothing but the task for which they had a comparative advantage, how many more floral arrangements would your store make, and how many more deliveries?
10)Suppose that in a three-hour block of time you can either make 2 batches of chocolate chip cookies or word-process 10 pages of text. In contrast, your roommate Keshawn can either make 4 batches of cookies or word-process 5 pages of text in a three-hour block of time. Which of the following is correct *
a)Your comparative advantage is in making cookies.
b)None of the above
c)Keshawn's comparative advantage is in word-processing text.
d)Your comparative advantage is in word-processing text.
Chemicals
Italy
Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are
shown in the graphs. It can be deduced that
Multiple Choice
O
Chemicals
Greece
Greece has a comparative advantage in chemicals
Greece has the absolute advantage in both products.
Italy has a comparative advantage in chemicals.
It is more costly in terms of resources to produce steel in Italy.
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Rafael's PPF Naomi's PPF 30 30 25 25 20 20 A 15 15 10 10 A 5 10 15 20 25 30 10 15 20 25 Rackets Rackets Refer to the diagrams above. Suppose that before trading, Rafael and Naomi had been producing at point A on their respective PPF. Then suppose they choose to specialize and trade. After specializing they trade 8 Rackets for 8 Balls. After this trade, Rafael will consume and Select one: а. 20 Rackets; 8 Balls b. 8 Rackets; 8 Balls C. 8 Rackets; 12 Balls d. 12 Rackets; 8 Balls Balls Balls 30arrow_forwardTwo planets, Endor and Kamino, both produce two goods, blasters and radio devices. The below graphs show the PPF curves of each planet before specialization. Initially, each planet produces 50,000 radio devices and 5,000 blasters. In total, 100,000 radios and 10,000 blasters are produced. Which planet has a comparative advantage in producing radios and which planet has a comparative advantage in producing blasters? If each planet was to fully specialize in producing one good, how many radios in total would be produced and how many blasters in total would be produced? Suppose that the two planets trade 5,000 blasters for 90,000 radios. Graph and label the new points on each planet’s PPF using the graphs above. What is the outcome of specialization and trade for each planet?arrow_forwardContext: In the absence of trade, assume Andy and Jack divide their time equally between the two activities. Then, Andy and Jack decide to trade with each other and specialize in the product in which they have a comparative advantage. You only need to explain with words how trade makes each person better off. Include graphs/tables/calculations in the explanation. Present answers with 4 decimals if needed. Note that Shoes & Gloves is in the x-axis, and Andy & Jack is in the y-axis. Production/hr Shoes Gloves Andy 96 62 Jack 74 38arrow_forward
- 3 1. Define comparative cost advantage. Suppose there are two persons in the society named Anika and Abrar. Both of them produce a particular quantity of two goods i.e., bread and ice-cream. Given terms of trade 6:10, do they gain out of trade? Explain.arrow_forwardThe New York Times (Nov. 30, 1993) reported that “the inability of OPEC to agree last week to cut production has sent the oil market into turmoil . . . [leading to] the lowest price for domestic crude oil since June 1990.” Statements True False The members of OPEC were trying to agree to cut production so they could save more oil for the future. OPEC was unable to agree on cutting production because each country has an incentive to cheat on any agreement. The newspaper also noted OPEC's view “that producing nations outside the organization, like Norway and Britain, should do their share and cut production.” What does the phrase “do their share” suggest about OPEC's desired relationship with Norway and Britain? OPEC would like Norway and Britain to act competitively. OPEC would like Norway and Britain to keep their production levels high. OPEC would like Norway and Britain to join the cartel.arrow_forwardOpportunity Cost and the Gains from Specializ PPF Review Problems What is the opportunity cost of an extra calculator for Smith? What is the opportunity cost of an extra calculator for Jones? Who has the absolute advantage in computer production? Who has the absolute advantage in calculator production? Who has the comparative advantage in calculator production? Who has the comparative advantage in computer production? Jones 6 120arrow_forward
- Elif can produce 6 pies or 30cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour. On the PPF lines, show what Elif produces and what Ahmet produces when they specialize. When they specialize and trade, what are the total gains from trade? If Elif and Ahmet share the total gains equally, which quantities of pies and cakes do they trade?arrow_forwardAt the start of this unit, we discussed the decision by many clothing companies to outsource production to Bangladesh and other low-wage economies. Show your results in a single diagram. 1. Draw the best response curve of the workers in the high-wage home country in the absence of outsourcing (with the wage on the horizontal axis, and effort on the vertical axis). 2. In the same diagram show the best response curve of workers in the foreign low-wage country in the absence of outsourcing. (Assume that wages are measured in dollars in both cases.) 3. Show in your diagram what the home country employer will pay home country workers if outsourcing is not possible. 4. Show in your diagram what the home country employer will pay workers in the low- wage country if it switches production there (ignore the costs of moving production). 5. Now assume that outsourcing is possible and is widely practiced by many firms in the clothing industry. Show the best response function for home country…arrow_forwardSuppose equilibrium in the market for strawberries is disturbed by two simultaneous events: a wildfıre destroys many acres of coastal land used to plant strawberries, and blueberries (a substitute for strawberries) experience a large price increase. What would we expect to happen in the market for strawberries? The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, and the equilibrium price would increase. O The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. Both equilibrium price and equilibrium quantity would decrease.arrow_forward
- Comparative and absolute advantage Antonio and Caroline are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest. Alfalfa Barley (Bushels per acre) (Bushels per acre) Antonio 40 8 Caroline 28 7 On the following graph, use the blue line (circle symbol) to plot Antonio's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Caroline's PPF. Antonio's PPFCaroline's PPF01002003004005006007008009001000200180160140120100806040200BARLEY (Bushels)ALFALFA (Bushels) _______ has an absolute advantage in the production of alfalfa, and ______ has an absolute advantage in the production of barley. Antonio's opportunity cost of producing 1 bushel of barley is…arrow_forwardQUESTION 28 You are the Minister of Trade for a small island country in the South Pacific with the following monthly production possibilities curve: 500 450- 400 350 300+ 250 200 150 100 50 ↑lemonade 500 450 400 350 300 250 200 150 100 You are negotiating a deal with a neighboring island that has the following monthly PPC: 50 100 150 200 250 300 350 400 pias ↑lemonade 50+ 50 100 150 200 250 300 350 400 Refer to the graphs above. Both countries specialize exclusively in the product for which they have a comparative advantage. You have agreed to sell them 160 bottles of lemonade in exchange for 100 pizzas. After the trade, your country has a total of bottles of lemonade and pizzas. A. 400; 100. B. 400; 200. O C. 160; 200. ++ pizzas D. 240; 100.arrow_forwardSuppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows: Output in Thousands of Litres Milk Cranberry Juice Northland 6 Or 3 Sounthland 2 Or 1 a) Which country has the absolute advantage in producing milk? b) Which country has the absolute advantage in producing cranberry juice? c) Which country has the comparative advantage in producing milk? d) Which country has the comparative advantage in producing cranberry juice? e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education