important goods that the US does specialize in. Global awareness is a vital topic that should be taught in order to eliminate this narrow- minded thinking. If Americans were to view global trade as a positive, there would be a major change in thinking with regards to imports available to Americans and American products Page 6 of 12
available to people in other countries because individuals in all countries would be more open to working together and creating efficient economies globally. If global awareness was raised and multiculturalism accepted, worldwide economic output would increase significantly. Efficiency in allocation is where “the economy allocates its resources so that consumers are as well off as possible,” (Krugman, P., & Wells, R., 2012, pp. 29). Countries each have a comparative advantage over other countries in some way and that could be utilized for the good of all. Each country could produce what they specialize in due to the increased opportunities created by reducing the burden of inefficiently producing goods in their economy. Resources would be used adequately and costs would be lower due to importing and exporting of lower priced goods from other countries. In turn, economies would improve and the general opinion about other cultures would as well. Consumers and businesses would be much better off if each country that specialized in creating certain goods maintained their production processes and continued to export these to countries that do not excel in this production. 2. In the ancient country of Roma, only two goods, spaghetti and meatballs, are produced. There are two tribes in Roma: the Tivoli and the Frivoli. By themselves, the Tivoli each month can produce either 30 pounds of spaghetti and no meatballs, or 50 pounds of meatballs and no spaghetti, or any combination in between. The Frivoli, by themselves, each month can produce 40 pounds of spaghetti and no meatballs, or 30 pounds of meatballs and no spaghetti, or any combination in between. Examine the first diagram showing the monthly production possibility frontier for the Tivoli and the monthly production possibility frontier for the Frivoli. Page 7 of 12
a.Which tribe has the comparative advantage in spaghetti production? Explain why.In order to determine which tribe has the comparative advantage in spaghetti production, we first need to consider the costs associated with producing one pound of spaghetti for each tribe. For the Tivoli tribe to produce one pound more of spaghetti, this would cost them 5/3 or 1 2/3 lbs of meatball production. In order for the Frivoli tribe to produce one more pound of spaghetti, this would cost them ¾ lbs of meatball production. Based on the production possibilityfrontier, the Frivoli tribe has comparative advantage in spaghetti production because the opportunity cost is lower. They would still be able to produce more meatballs than the Tivoli tribe for every one pound more of spaghetti produced.
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