ECON 4290 Lecture 4:

43 views8 pages

limegerbil648

15 Jan 2019

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

At point p, the relative price of producing 1 more unit of clothing ( given by the slope of the ppf) is lower than the relative price of 1 more unit of. Lecture 4 - october 1 clothing given by the rest of the world. P to v we produce less food but more clothing. We are still at full employment ( because we are still at the ppf ) trade has nothing to do with jobs. Now at v, pc/pf world = mcc / mcf. Yes because the value of your production equals the value of your consumption. And the world price of clothing = 1. Trade is about production and change on production. In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower.

Related Questions

The textbook considers the extension of the Ricardian model to more than two goods - let's consider the case of more than two countries.

Consider a world of five countries: two countries (A, B, C, D, and E), that produce clothing and food with one factor of production, labor. Suppose the opportunity cost of clothing with respect to food (a_LC/A_LF) in each country is the following:

A: 1 B: 2 C: 3 D:4 E:5

Suppose the international relative price of clothing is P_C/P_F = 3.5. What can you say about the pattern of trade?

blackspider212

Problem
#1 ( Budget Lines) :
Suppose that Russ has budgeted $20 a month to buy candy bars, music downloads, or
some combination of each. If Russ buys only candy bars he can obtain 40 bars a month; if
he buys only downloads, he can buy 20 a month.
1. What is the price of a candy bar?
2. What is the price of a music download?
3. What is the opportunity cost of a music download?
4. What is the opportunity cost of a candy bar?
5. Would the opportunity cost of each good change if Russ decided to increase his
monthly budget to $30 for the two items?
Problem #2 ( Production Possibilities ):
Suppose that a nation's production possibilities can be represented by the table below:
Production Alternatives

	Product Alternatives
Products	A	B	C	D	E
Food	0	4	8	12	16
Clothing	20	18	14	8	0

Products A B C D E
Food 0 4 8 12 16
Clothing 20 18 14 8 0
1. What is the maximum amount of food this economy can produce? How much clothing
can it produce at this point?
2. If the economy is producing at alternative C, what is the cost of one more unit of
food?
3. If the economy is producing at alternative C, what is the cost of one more unit of
clothing?
4. Is this economy subject to the law of increasing opportunity costs? How can you tell?
5. Suppose the economy is currently producing 4 units of food and 16 units of clothing.
Is this economy producing efficiently?

ceriseguinea-pig206

The production possibilities curve below shows the hypothetical relationship between the production of food and clothing in an economy.

Combination	Food	Clothing
A	0	4
B	7	3
C	13	2
D	18	1
E	22	0

Instructions: Enter all values as whole numbers.

a) What is the marginal opportunity cost of producing the first unit of clothing?

______

units of food

b) What is the total opportunity cost of producing the first unit of clothing?

______

units of food

c) What is the marginal opportunity cost of producing the fourth unit of clothing?

________

units of food.

d) What is the total opportunity cost of producing the fourth unit of clothing?

________

units of food.

e) Is 5 units of food and 2 units of clothing attainable or unattainable, given these production possibilities?

________

cerisegoose227

ECON 4290 Lecture 4:

Document Summary

Get access

Related Documents

ECON 4290 Lecture Notes - Lecture 7: 18 Months, Absolute Advantage, Perfect Competition

ECON 4290 Lecture 6:

ECON 4290 Midterm:

Related Questions