Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose there are 1 millions of workers in Country X. Each workers can either produce 2 units of game console or 30 units of

Suppose there are 1 millions of workers in Country X. Each workers can either produce 2 units of game console or 30 units of wheat in a year. What is the opportunity cost of producing a unit of game console in Country X? (1 mark) b. Suppose, for Country Y, the opportunity cost of producing a unit of game console is 25 units of wheat. i. a. C. Which country, X or Y, has a comparative advantage in producing game console? Explain. ii. Suppose in the international trade market, one unit of game console can be exchanged for 22 units of wheat. Explain whether Country X should buy or sell game console in the international market. What will be her gain from trade per unit of game console bought or sold? What will be the corresponding gain from trade for Country Y? (4 marks) Suppose recently, the Education Department of Country X has banned all her residence from playing video games with game consoles. One Key-Opinion Leader (KOL) claims that "since we don't need game consoles anymore, we should stop producing game console at all. We should put the resources in producing wheat instead". Given your above answers, explain whether you agree the claim of the KOL. (3 marks)

Step by Step Solution

3.47 Rating (163 Votes )

There are 3 Steps involved in it

Step: 1

a The opportunity cost of producing a unit of game console in country X is 15 units of wheat Since o... 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

Principles of economics

Authors: N. Gregory Mankiw

6th Edition

978-0538453059, 9781435462120, 538453052, 1435462122, 978-0538453042

More Books

Students also viewed these General Management questions

Question

What is the opportunity cost of a decision option?

Answered: 1 week ago

Question

What is the opportunity cost of the economics profession?

Answered: 1 week ago