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# HW_chap_3_additional_1_[1] - • the x-intercepts for both...

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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, Dopey and Sneezy, who make iPods and hard drives. Assume that their PPFs are straight lines. Dopey can make 50 iPods and no hard drives, or 60 hard drives and no iPods. When their economy is closed, Dopey chooses to produce 30 iPods and 24 hard drives. Sneezy can make 40 iPods and no hard drives, or 20 hard drives and no iPods. When their economy is closed, Sneezy chooses to make 4 iPods and 18 hard drives. 1) Graph the two production possibilities frontiers on one graph. Label the points where each economy is producing now. Put iPods on the x-axis and hard drives on the y-axis. A complete graph includes: a title which includes either the abbreviation “PPF” or the phrase “production possibilities frontiers” axis labeled with “iPod” and “hard drive”

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Unformatted text preview: • the x-intercepts for both PPFs • the y-intercepts for both PPFs • labels indicating which PPF is which • 2) Does one economy have the absolute advantage? If so – which one? 3) Fill out this table (you don’t have to do your work in the table): Dopey Sneezy Opp cost of 1 iPod Opp cost of 1 hard drive 4) Which economy has the comparative advantage in making iPods? Which has the comparative advantage in making hard drives? 5) If there was trade, and we assume that one economy only produces iPods, while the other economy only produces hard drives, which economy will produce iPods, and which will only produce hard drives? 6) Now assume that there is trade, and the economy that specializes in iPods exports 32 iPods, and the economy that specializes in hard drives exports 26 hard drives. Fill out this table: No Trade Yes Trade Produce Consume Produce Export Import Consume Gains from Trade Dopey iPods Dopey hard drives Sneezy iPods Sneezy hard drives...
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