Solved: Computing the resource costs or opportunity costs, Microeconomics

+44 141 628 6080
[email protected]

Computing the resource costs or opportunity costs

Consider the given two country-two goods world, with a single input, labor:

Daily production per worker
Commodity Portugal England
Wine (barrels) 2 OR 1
Cloth (bolts) 4 OR 3

Question 1) Does either country have absolute and/or comparative advantage in any product? Provide support for your answer by computing the "resource costs" or opportunity costs for both products in both countries.

Question 2) Following your answer to part a, is there any advantage in trading here? At what "prices" will such trade occur? In other words, what is the maximum amount of cloth relative to wine at which trade will occur? What is the minimum amount?

Question 3) Suppose the total cost of labor to produce daily output in each country is £20 in England, and E1600 (escudos) in Portugal. Further, let the exchange rate is £1=E50, what is the price of the goods in each country in pounds?

Question 4) What will the exchange rate have to be to discourage Portuguese imports of British goods? Similarly, what will the exchange rate have to be to discourage British imports of Portuguese goods?

View Complete Question

Solution Preview :

Prepared by a verified Expert

Microeconomics: Computing the resource costs or opportunity costs

Reference No:- TGS01744267

Now Priced at $20 (50% Discount)

Recommended (95%)

Rated (4.7/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Microeconomics

Q : Explain the operation of the krugman model

Ignoring the mathematics, explain the operation of the Krugman model in economic terms and indicate its principal lessons.

Q : Scale as a basis for international trade

Explan the increasing returns to scale as a basis for international trade. Be sure that you define the relevant concepts, describe important features of such trade, and contrast these features with those of trade due to other causes.

Q : Production possibilities data for landia and scandia

Answer the next question on the basis of the following production possibilities data for Landia and Scandia: Refer to the above data. What would be feasible terms of trade between Landia and Scandia?

Q : Revenue and costs components of a firms net profit

How can this concept be applied to the activities of profit making companies and profit loosing companies or to the revenue and costs components of a firm's net profit

Q : Computing the resource costs or opportunity costs

Does either country have absolute and/or comparative advantage in any product? Provide support for your answer by computing the "resource costs" or opportunity costs for both products in both countries.

Q : Trade with powerful industrialized countries

In the light of the Ricardian model, how might you evaluate the claim by developing countries that they are at a disadvantage in trade with powerful industrialized countries?

Q : Patter of comparative advantage

Prove that when both countries are producing both goods, the world can be made better off by allowing England and Portugal to reallocate labor and trade in accordance with the patter of comparative advantage.

Q : Correlation in ethical conduct-corporation-job satisfaction

Empirical studies reveal a positive correlation between ethical conduct in a corporation and job satisfaction.

Q : International trade and comparative advantage

Assume the given output and labor hours for Russia and Germany in producing Wheat and Cloths. Q1. Which country has the comparative advantage in wheat? Q2. Which country has the comparative advantage in cloth?

1942800

Questions
Asked

3,689

Active Tutors

1451131

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Solution Preview :

Prepared by a verified Expert

Microeconomics: Computing the resource costs or opportunity costs

Reference No:- TGS01744267

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : Explain the operation of the krugman model

Q : Scale as a basis for international trade

Q : Production possibilities data for landia and scandia

Q : Revenue and costs components of a firms net profit

Q : Computing the resource costs or opportunity costs

Q : Trade with powerful industrialized countries

Q : Patter of comparative advantage

Q : Correlation in ethical conduct-corporation-job satisfaction

Q : International trade and comparative advantage

What steps are the warnord issued

Build a plan for an extraordinary career

What would the employer be responsible for paying

How can the senior vp of hr overcome

What if experienced and spotted ethical dilemmas

Describes opinion of author with respect to it occupation

Calculate the average daily census

Solution Preview :

Prepared by a verified Expert

Microeconomics: Computing the resource costs or opportunity costs

Reference No:- TGS01744267

Recent Questions Asked Microeconomics

Q : Explain the operation of the krugman model

Q : Scale as a basis for international trade

Q : Production possibilities data for landia and scandia

Q : Revenue and costs components of a firms net profit

Q : Computing the resource costs or opportunity costs

Q : Trade with powerful industrialized countries

Q : Patter of comparative advantage

Q : Correlation in ethical conduct-corporation-job satisfaction

Q : International trade and comparative advantage

Asked Questions