Micro p58 3 091504

Micro p58 3 091504 - Japan can produce 250 million tons of...

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Adam Petrone-ID # 000490127 9/20/04 Microeconomics Sattinger Problem #3 p. 58 a) Cars Grain (tons) American 4 10 Japanese 4 5 Note: Figures are per worker b) American Production Possibilities Frontier Japanese Production Possibilities Frontier c) Opportunity Cost Of: 1 Car 1 Ton of Grain U.S. 2 1/2 Tons of Grain 4/5 of a Car Japan 1 1/4 Tons of Grain 4/5 of a Car d) No country has an absolute advantage in the production of cars. Both countries produce 4 cars/year per worker. The U.S. has an absolute advantage in the production of grain, because the U.S. can produce 10 tons of grain a year per worker and Japan produces 5 tons of grain a year per worker which is half as much.
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e) The U.S. has a Comparative Advantage when it comes to producing grain and Japan has the Comparative Advantage for Car production. f) America can produce 500 million tons of grain America can produce 200 million cars
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Unformatted text preview: Japan can produce 250 million tons of grain Japan can produce 200 million cars g) America produces all grain = 1 Billion tons Japan produces all cars = 400 million American trades 250 million tons grain for 200 million cars from Japan America ends up with 750 million tons grain and 200 million cars. Japan ends up with 250 million tons of grain and 200 million cars. Or… For arguments sake, in a theoretical trade situation where both countries benefit: America trades 400 million tons of grain for 200 million cars from Japan America ends up with 600 million tons of grain and 200 million cars. Japan ends up with 400 million tons of grain and 200 million cars. This trade arrangement benefits both countries as the U.S. nets +100 million tons of grain and Japan nets +150 million tons of grain versus a situation without trade....
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This note was uploaded on 04/28/2008 for the course ECO 110 taught by Professor Liugang during the Fall '08 term at SUNY Albany.

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Micro p58 3 091504 - Japan can produce 250 million tons of...

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