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The figure below shows the production possibilities frontiers for Luxembourg and Thailand. Each country produces two goods, chairs and HDTVs. Assume both countries have the same resources. Luxembourg Thailand Chairs Chain HDTV HDTV a) (2 points) Which country has an absolute advantage in the production of chairs? Which country has an absolute advantage in the production of HDTVs? Explain your choices.

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Nestor Rutherford
Nestor RutherfordLv2
8 Sep 2018

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Related questions

1. The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPF's. Suppose these countries decide to trade. Each country will specialize in the production of a good for which it has a comparative advantage.

What will each country produce?

A.Honduras will produce both goods.

B. Honduras will produce Steel and Brazil bananas.

C. Honduras will produce bananas and Brazil steel.

D. Brazil will produce both goods.

 

Honduras's PPF Brazil's PPF 10,000 10,000 9,000 9,000 8,000 8,000 Post Trade Consumption 7,000 7,000 .000 000 5,000 5.000 9.000 1,000 3,000 3,000 Post Trade Consumption 2,000 2,000 1,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons)

1. Workers in the country of Andalia can produce either 10 tons of cheese or 20 tons of yogurt using a certain quantity of resources. With this same quantity of resources, workers in the country of Barragon can produce either 6 tons of cheese or 18 tons of yogurt.

A. Which country has an absolute advantage in the production of these goods? Explain. (3 points)

B. Which country has a comparative advantage in the production of yogurt? Explain. (3 points)

C. Who benefits most from trade between these countries? Explain. (3 points)

D. What policy would benefit yogurt producers in Andalia? Explain. (3 points)

American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers.

a. Graph the production possibilities frontiers for the American and Japanese economies.

b. Which country has an absolute advantage in producing cars? In producing grain?

c. Which country has a comparative advantage in producing cars? In producing grain?

d. Without trade, half of each country’s workers produce cars and half produce grain. What quantities of cars and grain does each country produce?

e. Starting from a position without trade, give an example in which trade makes each country better off.

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