Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part A the answer is relative price of cloth in terms of tea for Uganda is 2oz/yard and for Tanzania it's 3oz/yard. Part B I

Part A the answer is relative price of cloth in terms of tea for Uganda is 2oz/yard and for Tanzania it's 3oz/yard. Part B I think the points on the graph for 50 labor hours would be 200 yards of cloth and 400 oz of tea for Uganda and it would be 450 oz of tea and 150 yards of cloth for Tanzania. Then part C I'm unclear and part D is 2.5oz/yard. I really need help with part C,D,and E. Thanks

image text in transcribed
The productivity in production of each good is shown below: Uganda Tanzania Productivity Ounces of tea per labor Yards of cloth per labor a. What is the pre-trade (relative) price of cloth (in terms of tea) in Uganda? What is the pre-trade price of cloth in Tanzania? b. Draw the production possibilities curve (ppc) for Uganda and Tanzania assuming each country has 50 units of labor. c. If trade opens between Uganda and Tanzania, which good should Uganda specialize in and why? Which good should Tanzania specialize in and why? Clearly mark the production points for Uganda and Tanzania on the graphs showing the ppc's, if they specialize in this manner. d. Which of the following is the possible international equilibrium price of cloth after trade opens and why: .2 ounces/yard, .4 ounces/yard, 1.0 ounces/yard, or 2.5 ounces/yard. e. Suppose, both Uganda and Tanzania specialize in accordance with their comparative advantage. Using the plausible international price of cloth from (b) above, show on graphs, the trade lines that shows the points (combination of goods) at which Uganda and Tanzania can consume after trade has opened. Show your work deriving the trade lines. How do these consumption points differ from the points at which they could consume in absence of trade? Explain economic significance of the difference. f. After opening of trade, how many ounces of tea can Uganda consume if it wants to consume 75 yards of cloth? (15+10+10+10+15+10)

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

Macroeconomics Principles and Applications

Authors: Robert e. hall, marc Lieberman

5th edition

1111397465, 9781439038970, 1439038988, 978-1111397463, 143903897X, 9781439038987, 978-1133265238

More Books

Students also viewed these Economics questions

Question

Comment on the pH value of lattice solutions of salts.

Answered: 1 week ago