HW 2
University of XXXBUS 500B Fall 2014
Homework 2.2
Due Date: Sunday 09/28
Instructor: KittiTrade
1.
Nation A’s production in 1 day Nation B’s production in 1 day
Computers 100
Software 140 Computers 120
Software 150
Two nations can produce computers and software in the amounts given in the table above.
Using the same amount of resources to produce two goods. Draw PPF curve and explain the reason of each question.
a. Does either nation have an absolute advantage in producing the products?
b. Which nation has a comparative advantage in computers?
c. Which nation has a comparative advantage in software?
2. Assume some guy named Spano and a woman named Bagley are stranded on an island. Two tasks must be done: fishing and building shelters. Assume that Bagley can catch one fish every 10 hours and build one thatched hut every 20 hours. While Spano (who is a bit on the clumsy side) can catch one fish every 15 hours and build a thatched hut every 45 hours. Now assume that during the year both Bagley and Spano each work 108,000 minutes.
First thing you have to do is to convert the measurement the unit from minute to hour (108,000/60=1800 hours)
Calculate how many fish they can catch and how many huts they can build on their own in one year.
Graph Production Possibility Frontiers for Bagley and Spano.
Who has the comparative advantage in the production of huts? Explain.
3. Please follow the example of US and Japan in class.
a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A.
b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts? (What they produce is what they consume)
c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now? (Each person
Homework 2.2
Due Date: Sunday 09/28
Instructor: KittiTrade
1.
Nation A’s production in 1 day Nation B’s production in 1 day
Computers 100
Software 140 Computers 120
Software 150
Two nations can produce computers and software in the amounts given in the table above.
Using the same amount of resources to produce two goods. Draw PPF curve and explain the reason of each question.
a. Does either nation have an absolute advantage in producing the products?
b. Which nation has a comparative advantage in computers?
c. Which nation has a comparative advantage in software?
2. Assume some guy named Spano and a woman named Bagley are stranded on an island. Two tasks must be done: fishing and building shelters. Assume that Bagley can catch one fish every 10 hours and build one thatched hut every 20 hours. While Spano (who is a bit on the clumsy side) can catch one fish every 15 hours and build a thatched hut every 45 hours. Now assume that during the year both Bagley and Spano each work 108,000 minutes.
First thing you have to do is to convert the measurement the unit from minute to hour (108,000/60=1800 hours)
Calculate how many fish they can catch and how many huts they can build on their own in one year.
Graph Production Possibility Frontiers for Bagley and Spano.
Who has the comparative advantage in the production of huts? Explain.
3. Please follow the example of US and Japan in class.
a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A.
b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts? (What they produce is what they consume)
c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now? (Each person