Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Two countries (A and B) that both produce cars and bikes. The two countries use the exact same materials, only the makespans for the products
Two countries (A and B) that both produce cars and bikes. The two countries use the exact same materials, only the makespans for the products are different. In country A it takes 8 hours to assemble a car and 2 hours to build a bike. In country B, on the other hand, it only takes 10 hours to finish a car and 5 hours to assemble a bike. Assume that both countries have 2000 labor hours available. If they both decided to allocate half of those resources to each product, country A could produce 125 cars and 500 bikes while country B could produce 100 cars and 200 bikes. This would result in a total output of 925. 1. Construct a diagram showing each country with corresponding absolute advantage. 1. Constructing a diagram, show, in which product the countries have a comparative advantage
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started