1,000 words paper econ
Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil produces 100,000 units of clothing per year and 50,000 cans of soda. The United States produces 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant.
- What would be the production possibility frontiers for Brazil and the United States?
- Without trade, the United States produces 45,000 units of clothing and 150,000 cans of soda.
- Without trade, Brazil produces 75,000 units of clothing and 30,000 cans of soda.
- Denote these points on each other’s production possibility frontier.
- What is the marginal transformation rate for each country?
- Should the two countries specialize and trade?
- If so, who has the comparative advantage in what product?
- Once they specialize, how much does output increase?
- What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing?
- Are the consumers in each country better off?
- What is the labor-intensive good?
- What is the labor-abundant country?
- What is the capital-abundant country?
- Could trade help reduce poverty in Brazil and other developing countries?
- How do product and factor prices and wages eventually equalize between the two countries?
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xxxxxxx xxxxx ECONOMICS 1
xxx xxxxxxxxxx xxxxxxxxxxx xxxxxxxx xx both countries xxxxxxx xxxx the United States has xxx xxxx xx xxx resources on the xxxxxxxxxx of xxxx of soda xxxxx Brazil has put more xxxxxxxxx on the production xx xxxxxx hence producing xxxx xxxxxxx than xxx United xxxxxxx All xx all, the production xx Clothes xx xxxxxx xx backed xx xx the large production xx xxxxxx in xxx xxxxxxx compared xx the United States. That is one of xxx xxxx reasons why xxx xxxxxx States xxxxx xx the xxxxxxxxxx xx soda while Brazil leads in xxx xxxxxxxxxx of xxxxxxxx xxxxx xxxxxxxxxx xxxxx to xxx xxxxxxxxxx Possibility xxxxxxxxx xx both xxxxxxxxx xxxx x xxxxxxx will produce with the xxxxxxxx supply xx xxxxx capital xxx entrepreneurship xxx with the limited xxxxxx xx economic resources, xx the xxx of Brazil shows a xxxxxxx
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