assignment #1

assignment #1 - Ying Zheng 872352150 Professor: Mark Evers...

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Ying Zheng 872352150 Professor: Mark Evers 04/03/2010 Assignment #1 Satellites Sport Shoes (Pairs) (In millions) PRC 1 50 USA 10 100 (a) Does one country have an absolute advantage in production over the other? How can you tell? Answer: USA has absolute advantage in production over PRC. USA can produce more output per unit of input than PRC on satellites and sports shoes. (b) Does one country have a comparative advantage I production over the other? How can you tell? Answer: In PRC, 1 satellite costs 50 million pairs of sports shoes in cost; In USA, 1 satellite equals to 10 million pairs of sport shoes in cost. Conclusion: USA has comparative advantage in satellites production. In PRC, 1 million pairs of sport shoes equals to 0.02 satellites. In USA, 1 million pairs of sport shoes equals to 0.1 satellites. Conclusion: USA has comparative advantage in sports shoes production. Suppose further that the United States has 1 unit of input (measures in hundreds of millions of workers) and China has 4 units of input (measures in hundreds of
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This note was uploaded on 05/25/2011 for the course ECON 1020 taught by Professor Evers during the Spring '08 term at Denver.

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assignment #1 - Ying Zheng 872352150 Professor: Mark Evers...

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