production possiblities curve, Business Economics

Assignment Help:

1. Imagine that two countries, Richland and Poorland can produce just two goods, computers and coal. Assume that for a given amount of land and capital, the output of these two products requires the following constant amounts of labour:
Richland Poorland
1 computer 2 4
100 tonnes of coal 4 5
Assume that each country has 20 million workers.
(a) Draw the production possibility curves for the two countries (on two separate diagrams).
(b) What is the opportunity cost of a computer in (i) Richland; (ii) Poorland?
(c) What is the opportunity cost of 100 tonnes of coal in (i) Richland; (ii) Poorland?
(d) Which country has a comparative advantage in which product?
(e) Assuming that price equals marginal cost, which of the following would represent possible exchange ratios? (i) 1 computer for 40 tonnes of coal; (ii) 2 computers for 140 tonnes of coal; (iii) 1 computer for 100 tonnes of coal; (iv) 1 computer for 60 tonnes of coal; (v) 4 computers for 360 tonnes of coal.
(f) Assume that trade now takes place and that 1 computer exchanges for 65 tonnes of coal. Both countries specialise completely in the product in which they have a comparative advantage. How much does each country produce of its respective product?
(g) The country producing computers sells 6 million domestically. How many does it export to the other country?
(h) How much coal does the other country consume?


Related Discussions:- production possiblities curve

Change in currency rate, Change in Currency Rate Change in the sterlin...

Change in Currency Rate Change in the sterling currency rate has also great consequences because it depends upon the sterling currency rate to the other countries as well. As

Determine what is the quality of money, The economy of Cotai contains 2000 ...

The economy of Cotai contains 2000 $1 bills. (a) If people hold all money as currency, what is the quantity of money? (b) If people hold all money as demand deposits and bank

Actual and theoretical price adjustment, For any stock splits (if there wer...

For any stock splits (if there were any it will look like the screen below) compare the actual and theoretical price adjustment.  For example, on the day that a 2-for-1 split is ef

Find quantity supplied and quantity demanded, Find quantity supplied and qu...

Find quantity supplied and quantity demanded: Suppose there are 300 used cars, with 3 quality levels: bad, medium, and good.  A seller knows the quality of his car but a buyer

Effective private sector involvement, Problem 1: (a) The Mauritian gove...

Problem 1: (a) The Mauritian government is now increasingly involving the private sector in the development of the economy. How can government support effective private sector

What is conditionality, What is Conditionality? Conditionality is the ...

What is Conditionality? Conditionality is the needs imposed onto countries as pre-conditions for loans. Into crisis situations member countries seek assist from the IMF for

Colonial background countries of the development process, What are colonial...

What are colonial background countries of the development process? A colony is a country controlled by other. Various European countries had extensive empires as: • Latin

The characteristics of command and market economies, QUESTION (a) What ...

QUESTION (a) What are the characteristics of command and market economies? (b) In a number of countries in recent years, there has been a movement towards a greater reliance

Can less developed countries grow by secondary sector, Can economies grow o...

Can economies grow of less developed countries by developing its secondary sector? Economies grow of less developed countries by developing its secondary sector because manufac

Business enviornment fact-finding, 1. The student is required to research a...

1. The student is required to research a business topic, drawing information from a number of sources, prepare and give a talk to a group, and answer questions. Simply presenting

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd