Cost: Macro and Microeconomic Concepts in a Global Context

Apr 19th, 2014
Anonymous
Category:
Accounting
Price: $25 USD

Question description

Deliverable Length:1,000–1,200 words
Details:

Due Date: 04/20/2014

Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil produces 100,000 units of clothing per year and 50,000 cans of soda. The United States produces 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant.

  • What would be the production possibility frontiers for Brazil and the United States?
    • Without trade, the United States produces 45,000 units of clothing and 150,000 cans of soda.
    • Without trade, Brazil produces 75,000 units of clothing and 30,000 cans of soda.
    • Denote these points on each other’s production possibility frontier.
  • What is the marginal transformation rate for each country?
    • Should the two countries specialize and trade?
    • If so, who has the comparative advantage in what product?
    • Once they specialize, how much does output increase?
  • What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing?
    • Are the consumers in each country better off?
  • What is the labor-intensive good?
  • What is the labor-abundant country?
  • What is the capital-abundant country?
  • Could trade help reduce poverty in Brazil and other developing countries?
  • How do product and factor prices and wages eventually equalize between the two countries?

Tutor Answer

(Top Tutor) ievordzor
School: University of Virginia
PREMIUM TUTOR

Studypool has helped 1,244,100 students

Review from student
Anonymous
" Goes above and beyond expectations ! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1826 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors