Econ 232 Homework 3 Problem Answers

ECON 232 Homework 3 Problem Answers
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ECON 232 Homework 3 Problem Answers

Chapter 3
1. In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine.

1. Who has the absolute advantage in production of sweaters? In the production of wine? How can you tell?

1. Calculate the opportunity cost of producing 6 additional sweaters in France and in Tunisia. Which country has a comparative advantage in the production of sweaters?

1. Calculate the opportunity cost of producing 6 additional bottles of wine in France and Tunisia.
Which country has a comparative advantage in the production of wine?

1. In this example, is absolute advantage the same as comparative advantage, or not?

1. In what product should France specialize in producing? In what product should Tunisia specialize in producing?

8. Consider trade between Japan and Indonesia involving computers and toaster ovens. The number of computers and toaster ovens that a worker can produce in each country is shown in the table below.
In Japan                                               In Indonesia
One worker can make                         12 computers                                       8 computers
30 toaster ovens                   24 toaster ovens
Say that in a world without trade, the Japanese economy has 100,000 workers working on these two products, with 60,000 of them working to produce computers and 40,000 of them working to produce ovens. Indonesia is devoting a total of 240,000 workers to these two products, using half of their workers to produce computers and half of their workers to produce ovens. Now answer the following
questions:
1. Who has the absolute advantage in the production of computers? In the production of ovens?
Explain how you can tell.

1. Who...