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Name: ECON 100 Fall 2021 Assignment 6: Comparative Advantage You may answer the following questions in the space below or on a separate paper. Please
Name: ECON 100 Fall 2021 Assignment 6: Comparative Advantage You may answer the following questions in the space below or on a separate paper. Please complete this assignment individually. 1. (3 points) Define absolute advantage. Explain how the class demonstration of making base- balls and airplanes illustrates the idea of absolute advantage. Who has the absolute advantage? How do you know? 2. (2 points) In the absolute advantage demo, were both Country A and Country B better off if they specialized and traded? How do you know this? 3. (3 points) Define comparative advantage. Explain how the class demonstration of making baseballs and airplanes illustrates the idea of comparative advantage. Who has the comparative advantage? How do you know? 4. (2 points) In the comparative advantage demo, were both Country A and Country B better off if they specialized and traded? How do you know this?5. (31 points) The average worker at Sobeys South can make 10 desserts or 30 salads in one hour. The average worker at Sobeys North can make 30 desserts or 30 salads in one hour. There are 10 workers at Sobeys South and 10 workers at Sobeys North. 1. Construct the PPFs for what each location can produce in one hour. (4) 2. If Sobeys North and Sobeys South each use half of their workers to make desserts and half of their workers to make salads, how many desserts and salads will each produce? Mark these points on the PPFs. How many total goods will each store produce? Combine the goods produced by Sobeys North and Sobeys South, how many total goods are produced? (10) 3. What is the opportunity cost for Sobeys South to make a dessert? For a salad? (2) 4. What is the opportunity cost for Sobeys North to make a dessert? For a salad? (2) 10. . Who has the comparative advantage in desserts? In salads? (2) . If each location specializes and trades, who should produce What? (2) If Sobeys North and Sobeys South specialize, how many goods will each company produce? What is the total number of goods produced? (3) . What should the trade rate be? (2) Showr on each graph a consumption point that is outside of the PPF and can be obtained by specializing and trading. (2) Compare the amount of goods consumed by customers after the two locations trade with the amount of goods available for customer consumption in question 2. (2) Airplane and Baseball Demo - Demo Worksheet ECON 100 Fall 2021 Absolute Advantage Demo Country A Country B Baseballs 270 or or So Airplanes PPF for Country A 150 110 8 8 8 8 Quantity of Airplanes 8 & 140 132 40 60 80 100 120 140 160 180 200 220 240 260 280 300 Quantity of Baseballs Number of goods PRODUCED and CONSUMED if NO TRADE: Country A Country B | Total Baseballs Airplanes 84 Total 2 127\fECON 100 Fall 2018 1060 701 794 Comparative Advantage Demo Country A Country B Baseballs 26 or or 113 Airplanes PPF for Country A 140 120 100 Quantity of Airplanes 8 8 8 8 8 9 & 40 60 80 100 120 140 160 180 200 220 240 260 280 300 Quantity of Baseballs Number of goods PRODUCED and CONSUMED if NO TRADE: Country A Country B | Total Baseballs So Airplanes Total 196 280PPF for Country B 150 140 130 120 110 8 Quantity of Airplanes 8 8 8 8 8 9 8 8 200 220 240 260 280 300 8 S 120 160 180 8 100 140 Quantity of Baseballs Determining Comparative Advantage: Country A Country B Country A Country B #Baseballs 281 113 # Airplanes # Airplanes 113 # Baseballs 281 P Opportunity cost Opportunity cost of 1 airplane 2.49 baseball . 94 waddellof 1 baseball . 40 airplane 1.06 airplane Number of goods PRODUCED if countries specialize based on COMPARATIVE ADVANTAGE: Country A Country B | Total Baseballs 221 Airplanes 30 Total 251 117 368PPF for Country B Quantity of Airplanes 8 9 8 & 2 270 2 60 80 100 120 140 160 180 200 220 240 260 280 300 Quantity of Baseballs Number of goods PRODUCED if countries specialize based on ABSOLUTE ADVANTAGE: Country A Country B |Total Baseballs 270 270 Airplanes O So Total 270 359 Number of goods CONSUMED if countries specialize based on ABSOLUTE ADVANTAGE and TRADE: Country A Country B Total Baseballs 270 Airplanes Total 225 1359 Show points obtainable from trade on PPF graphs
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