The Crazies

Problem 3.8. Vintland and Moonited Republic Table of action at law Requirements: fuddle cheese Vintland 15 10 M.Rep. 10 4 a. Moonited Republic has an absolute avail in both goods -- it potbelly ready both booze and cheese with lower undertaking inputs. b. chance personify calculations: In Vintland: To erect an extra nursing store of booze, you request 15 hours of labor. This doer taking 15 hours of labor out-of-door from cheese, and since 10 hours is needed for for each one kg of cheese, this means bounteous up 1.5 kilos of cheese. Hence in Vintland the OC of a store of wine is 1.5 kilograms of cheese. In Moonited Republic, to produce 1 bottle of wine you need 10 hours of labor, and to get the 10 hours of labor by transferring workers from the cheese industry, you must(prenominal) give up 2.5 kilos of cheese. In Moonited Republic, the OC of a bottle of wine is 2.5 kilograms of cheese. Hence, Vintland is the low opportunity hail maker of wine and has the comparative service in cheese. direct the OC of producing another(prenominal) kilo of cheese: you leave alone find it as 2/3 of a bottle of wine in Vintland, and as four-tenths of a bottle of wine in MR. Since 0.67 > 0.4, Vintland is the high opportunity appeal producer of cheese, and MR has the comparative advantage in cheese. c.

PPFs: Write the business functions for Vintland: Wine = 1/15 Labor. If all 30 cardinal workers in Vintland were in Wine, Wine output would be 2 million. Cheese = 1/10 Labor. If all 30 million workers in Vintland were in Cheese, Cheese production wourl be 3 million. In MR, the production functions atomic number 18 Wine = 1/10 Labor, for a maximum of 2 million (the same as Vintland) and Cheese = 1/4 Labor, so that maximum production = 1/4 (20 million) or 5 million. d. Autarky address ratios: Suppose Vintland takings ar $ 2, so that Pw = $ 30 and Pc = $ 20. Pw / Pc = 1.5 Suppose MR wages are € 5, so that Pw = € 50 and Pc = € 20. Pw / Pc = 2.5 The school text assumes that Pw / Pc = 2.0 [wine is twice as expensive as cheese] Since...If you call for to get a ripe essay, order it on our website: Ordercustompaper.com

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