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

Type of project management require to deliver to volunteer, What kind of pr...

What kind of project management would you require to deliver to have people volunteer to work on your projects? The leadership challenge is to suppose that everyone working ont

CORPORATE STRATEGY, WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIE...

WHAT STRATEGIES ARE SUGGESTED FROM THE CONVENTIONAL VIEW OF THE INDUSTRY LIFE CYCLE

The causes and persistence of inflation, QUESTION (a) Analyse the activ...

QUESTION (a) Analyse the activist and non-activist policy makers' choice between implementing a policy rule or a discretionary monetary policy. (b) Explain why the policy ru

What are the restrictions of dependency theory, What are the restrictions o...

What are the restrictions of dependency theory? The restrictions of dependency theory: • Self sufficiency and import-substitution strategy mean the advantages of Internatio

Terms of trade deteriorating in less developed countries, Why are the terms...

Why are the terms of trade deteriorating for Less Developed Countries? Problem: The substantial decline within real commodity prices and the deterioration into the terms of

ASSIGNMENT, What is a bowed out shape? Why does a production possibilities...

What is a bowed out shape? Why does a production possibilities frontier with increasing opportunity costa have a bowed-out shape?

Present value or worth of this bond, Suppose a $1,000 face value bond has a...

Suppose a $1,000 face value bond has a coupon rate of 8.5 percent, pays interest semi-yearly, and has an eight-year life. If investors are willing to take a 10.25 percent rate of r

Economics, Why does a production possibilities frontier with increasing opp...

Why does a production possibilities frontier with increasing opportunity costs have a bowed-out shape?

Explain the term capital accumulation, (i) Explain the term capital accumu...

(i) Explain the term capital accumulation. (ii) Explain the different views on economic development. (iii) In the golden age of globalization countries, especially develop

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