Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and

image text in transcribed
image text in transcribed
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. China and Russia are trading partners. Both countries have the same amount of resources and can produce bulldozers and/or trucks. The production possibilities curves below show the combination of bulldozers and trucks that each country can produce Trucks (units) China's 35 / 10 PPC 20 / 25 30- 207 O 40 Bulldozers (units) (a) Assume that prior to trade, Russia is producing 0 units of bulldozers and 10 units of trucks. What can you conclude about the use of resources in Russia? Explain using the production possibilities curve model. (b) Which country has the comparative advantage in the production of bulldozers? Explain using numbers. (c) Now assume each country specializes in the production of the good in which it has a comparative advantage, and the terms of trade are 5 units of bulldozers for 1 unit of trucks. Will Russia gain from trade? Explain. (d) Assume Russia and China are able to double the production of bulldozers. Which country now has the absolute advantage in the production of bulldozers? Explain using numbers (e) Assume China's civilian working-age population is 125 million, the labor force participation rate in China is 80%, and the unemployment rate is 8%. Calculate the number of unemployed people in China. Show your work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Relations

Authors: Tom Kelleher

1st Edition

0190201479, 9780190201470

More Books

Students also viewed these Economics questions