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Cuba’s Ten Million Ton Sugar Harvest x In the 1960s, Cuba produced about 6 to 7 million tons of sugar a year, which was sold primarily to countries in the Soviet bloc. x Beginning in 1969, Cuban dictator Fidel Castro sent hundreds of thousands of urban workers into the fields in an effort to produce 10 million tons of sugar in 1970. x Ultimately, Cuba missed its goal and only managed to produce 8.5 million tons – the largest harvest in Cuban history. What were the effects on Cuban economy? For simplicity, assume that before the plan: x Cuba produced 6 million tons of sugar and 5 million tons of "everything else" x relative price of sugar was one ton of everything else per ton of sugar, x at a relative price of sugar else everything 1 , Cuba traded 2 million tons of sugar for 2 million tons of everything else and x consumed 4 million tons of sugar and 7 million tons of everything else
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Unformatted text preview: massive disruptions in the Cuban economy Since Cuba allocated all of its production to sugar, it produced at the "sugar corner" of its PPF. At that corner, the opportunity cost of producing sugar exceeds the relative price of sugar. For simplicity, let's pretend that Cuba: x succeeded in producing all 10 million tons of sugar, but didn't produce anything else x at a relative price of sugar else everything 1 , Cuba traded 6 million tons of sugar for 6 million tons of everything else and x consumed 4 million tons of sugar and 6 million tons of everything else So (in this example) Cubans consumed the same amount of sugar, but their consumption of everything else fell from 7 million tons to 6 million tons – a 15 percent decrease. Page 30...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.

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