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It takes Country A two hours to produce a unit of consumer goods and five hours to produce a unit of capital goods. Country B

  1. It takes Country A two hours to produce a unit of consumer goods and five hours to produce a unit of capital goods. Country B can produce a unit of consumer goods in one hour and a unit of capital goods in four hours. Which country has a comparative advantage in the production of consumer goods? Explain.
  2. Country A has the following labor market data:
Employed 91,000
Frictionally unemployed 4,000
Structurally unemployed 2,000
Cyclically unemployed 3,000
Not in the labor force, aged 16 years and over 25,000
  1. Calculate the unemployment rate for Country A.
  2. Calculate the labor force participation rate for Country A.
  3. Illustrate Country A's current employment of resources every 10 hours on a production possibilities curve with capital goods on the vertical axis and consumer goods on the horizontal axis. Assume constant opportunity costs. Indicate the current employment based on the data from (b) with a point labeled E.

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