The Crazies

Problem 3.8. Vintland and Moonited Republic Table of action mechanism Requirements: fuddle high mallow Vintland 15 10 M.Rep. 10 4 a. Moonited Republic has an absolute communicate in both goods -- it tin can ready both vino and cheese with lower undertaking inputs. b. opportunity personify calculations: In Vintland: To start an extra nursing store of drink, you bespeak 15 hours of labor. This government agency taking 15 hours of labor out-of-door from cheese, and since 10 hours is needed for from each one kg of cheese, this means endowment up 1.5 kilos of cheese. Hence in Vintland the OC of a store of wine is 1.5 kilograms of cheese. In Moonited Republic, to produce 1 bottle of wine you need 10 hours of labor, and to get the 10 hours of labor by transferring workers from the cheese industry, you essential give up 2.5 kilos of cheese. In Moonited Republic, the OC of a bottle of wine is 2.5 kilograms of cheese. Hence, Vintland is the low opportunity embody maker of wine and has the comparative degree profit in cheese. take cargon the OC of producing another(prenominal) kilo of cheese: you impart find it as 2/3 of a bottle of wine in Vintland, and as four-tenths of a bottle of wine in MR. Since 0.67 > 0.4, Vintland is the high opportunity bell producer of cheese, and MR has the comparative advantage in cheese. c.

PPFs: Write the plodding functions for Vintland: Wine = 1/15 Labor. If all 30 firebird workers in Vintland were in Wine, Wine output would be 2 one million million. Cheese = 1/10 Labor. If all 30 million workers in Vintland were in Cheese, Cheese production wourl be 3 million. In MR, the production functions ar Wine = 1/10 Labor, for a maximum of 2 million (the same as Vintland) and Cheese = 1/4 Labor, so that maximum production = 1/4 (20 million) or 5 million. d. Autarky follow ratios: Suppose Vintland reward are $ 2, so that Pw = $ 30 and Pc = $ 20. Pw / Pc = 1.5 Suppose MR wages are € 5, so that Pw = € 50 and Pc = € 20. Pw / Pc = 2.5 The school text assumes that Pw / Pc = 2.0 [wine is twice as expensive as cheese] Since...If you emergency to get a right essay, order it on our website: Ordercustompaper.com

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