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Econ 100 San Francisco State HW Chapter 3 You do not need to turn this problem in to me, but you can assume that there will be a problem very similar to it in either a quiz or an exam. It would greatly benefit your to do it. Lets say there are two economies, Nerdland and Kutcherland, who make movies and books. Assume that their PPFs are straight lines. Nerdland can make 50 books and no movies, or 40 movies and no books. When their economy is closed, Nerdland chooses to produce 20 movies and 25 books. Kutcherland can make 30 books and no movies, or 20 movies and no books. When their economy is closed, Kutcherland chooses to make 18 movies and 3 books. 1) Graph the two production possibilities frontiers on one graph. Label the points where each economy is producing now. Put movies on the x-axis and books on the y-axis. A complete graph includes: a title which includes either the abbreviation “PPF” or the phrase “production possibilities frontiers”
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Unformatted text preview: axis labeled with movies and books the x-intercepts for both PPFs the y-intercepts for both PPFs 2) Does one economy have the absolute advantage? If so which one? 3) Fill out this table (you dont have to do your work in the table): Nerdland Kutchnerland Opp Cost of 1 movie Opp Cost of 1 book 4) Which economy has the comparative advantage in making movies? Which has the comparative advantage in making books? 5) If there was trade, and we assume that one economy only produces books, while the other economy only produces movies, which economy will produce books, and which will only produce movies? 6) Now assume that there is trade, and the economy that specializes in movies exports 19 movies, and the economy that specializes in books exports 26 books. Fill out this table: No Trade Yes Trade Produce Consume Produce Export Import Consume Gains from Trade Nerdland Movies Nerdland Books Kutcherland Movies Kutcherland Books...
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