Example1 Answer

Example1 Answer - ECON460:Example1 1 #ofhours/PC Bangladesh...

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ECON 460: Example 1 1. Use the following information to answer the questions below: # of hours/PC # of hours/Shirt Bangladesh 100 2 USA   20 1 a. Which country has an absolute advantage in making PCs? Shirts? USA for both because of lower labor requirement b. Which country has a comparative advantage in each of these goods? OC of a PC in Bangladesh = 50 shirts OC of a PC in USA = 20 shirts USA in PC due to the lower opportunity cost. OC of a Shirt in Bangladesh = 1/50 PC OC of a Shirt in USA = 1/20 PC Bangladesh in Shirt due to the lower opportunity cost. c. What is the autarky price of a PC in Bangladesh? USA? Bangladesh: 1 PC = 50 shirts  or 1 shirt = 1/50 PC USA: 1 PC = 20 shirts or 1 shirt = 1/20 PC d. Let us say that the terms of trade is 1 PC = 40 shirts. What is the number of hours saved  by Bangladesh and USA per unit of their respective import good? Time taken to make 1 PC = 100 hours
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Example1 Answer - ECON460:Example1 1 #ofhours/PC Bangladesh...

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