Who can produce more?

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Question Description

Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil can produce 100,000 units of clothing per year and 50,000 cans of soda. The United States can produce 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant. For this example, assume that the production possibility frontier (PPF) is a straight line for each country because no other data points are available or provided. Include a PPF graph for each country in your paper. Chapter 5 of the Suranovic text is a good reference for this task.

Complete the following:

• What would be the production possibility frontiers for Brazil and the United States?
• Without trade, the United States produces AND CONSUMES 32,500 units of clothing and 125,000 cans of soda.
• Without trade, Brazil produces AND CONSUMES 50,000 units of clothing and 25,000 cans of soda.
• Denote these points on each COUNTRY’s production possibility frontier.
• Using what you have learned and any independent research you may conduct, which product should each country specialize in, and why?

To assist in your thinking and discussion, additional questions to consider include:

• What is the labor-intensive good?
• What is the Marginal Rate of Transformation impact?
• What is the labor-abundant country?
• What is the capital-abundant country?
• Could trade help reduce poverty in Brazil and other developing countries?

Deliverables 800-1000 word

nkostas
School: Duke University

Attached.

Production Possibility
Student’s Name
Institutional Affiliation
Date

1

PRODUCTION POSSIBILITY

2
Production possibility

The production possibility frontiers for Brazil and the USA
According to the concepts of absolute along with the comparative advantages the United
States of America have to specialize in the production of soda (1 can of soda costs here
32,5/125=0.26 units of clothing, and in Brazil, it costs 50/25=2 units of clothing). Brazil should
specialize in the production of clothing (one unit of clothing costs here 25/50=0.5 can consist of
soda, and in the United States of America it costs 125/32, 5=3.85 cans of soda).

PRODUCTION POSSIBILITY

3

From the above figure shown, without trade production of point of Brazil and the US has
been presented as point A and B respectively.
Therefore, for Brazil, the rate of Marginal transformation = 100,000/50,000 = 2 units of cloth.
Thus, In Brazil, 2 units production of clothing
require to be given up to produce the additional unit of the soda can. In the same way, for the
United States, the rate of Marginal transformation is equal to= 65,000/250,000 = 0.26 units of
cloth
In the USA, 0.26 unit are only units of clothing that are produced and at the same time
are required to be given up to produce the extra soda can. The labor-intensive good in other
hand is where an industry that requires greater labor volume costs in the production as d...

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Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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