Another International Trade Worksheet

Another International Trade Worksheet - 1. Charles can...

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1. Charles can gather 2 pounds of nuts or pick 4 pounds of coffee per hour while Sam can gather 4 pounds of nuts or pick 2 pounds of coffee per hour. Suppose they each work 6 hours a day. A) Draw the production possibilities curve for both Charles and Sam. Charles’s PPC slope: ________ Sam’s PPC slope: ______ B) Sam has a comparative advantage in ( coffee / nuts) and Charles has a comparative advantage in ( coffee / nuts) . We can see this on the graph because the slope of Sam’s PPC is ( steeper / flatter) than Charles’s. C) Suppose that Sam and Charles decide to work together so that they can maxi-mize their production of nuts and coffee. If both Sam and Charles gather nuts, they will gather _______ pounds of nuts in 6 hours. If both Sam and Charles only pick coffee, they will pick _______ pounds of coffee in 6 hours. If Sam and Charles spe-cialize according to their comparative advantages they will pick _______ pounds of coffee and _______ pounds of nuts in 6 hours.
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This note was uploaded on 07/01/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas at Austin.

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Another International Trade Worksheet - 1. Charles can...

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