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

Price elasticity, what is price expectation elasticity of demand?

what is price expectation elasticity of demand?

Household sector, The prevention of main swings in economic activity can be...

The prevention of main swings in economic activity can be handled most simply by the household sector. Explain why?

A transition economy, A  transition economy is Moving from a planned t...

A  transition economy is Moving from a planned to a mixed or free market economy.

What is the development gap, What is the development gap? The developme...

What is the development gap? The development gap refers to the divergence between standards of living in the developed and developing world. As like Source World Bank:

Eco/561, purely competitive firms increase total revenue by

purely competitive firms increase total revenue by

Is there an optimum population size for a country, Is there an optimum popu...

Is there an optimum population size for a country? Optimum (best) population arises while productivity that is output per person is highest. • An under-populated country ca

Why is not aid improving development, Why is not Aid improving development?...

Why is not Aid improving development? Aid not improves development because: • Aid is spent on current consumption • It is spent on unsuitable capital as opposed to suitab

Introduction., need help how to write a introduction for the assignment of ...

need help how to write a introduction for the assignment of business environment

Does economic growth automatically reduce poverty, Does economic growth aut...

Does economic growth automatically reduce poverty? Growth implies more goods and services are obtainable to satisfy more wants and requirements. But the benefits of growth may

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