Suppose there exist two imaginary countries, Glacier and Sequoia. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Almonds Country (Pounds per hour of labor) Glacier 5 Sequoia 4 Shorts (Pairs per hour of labor) 10 16 Suppose that initially Glacier uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Sequoia uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Glacier produces 5 million pounds of almonds and 30 million pairs of shorts, and Sequoia produces 12 million pounds of almonds and 16 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts it produces. Glacier's opportunity cost of producing 1 pound of almonds is almonds is of shorts. Therefore, comparative advantage in the production of shorts of shorts, and Sequoia's opportunity cost of producing 1 pound of has a comparative advantage in the production of almonds, and has a

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter2: Production Possibilities Frontier Framework

Section: Chapter Questions

Problem 4WNG

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Suppose there exist two imaginary countries, Glacier and Sequoia. Their labor forces are each capable of supplying four million hours per week that
can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be
produced by one hour of labor.
Almonds
Country (Pounds per hour of labor)
Glacier
Sequoia
5
4
Shorts
(Pairs per hour of labor)
10
16
Suppose that initially Glacier uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Sequoia
uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Glacier produces 5 million
pounds of almonds and 30 million pairs of shorts, and Sequoia produces 12 million pounds of almonds and 16 million pairs of shorts. Assume there are
no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds
and shorts it produces.
Glacier's opportunity cost of producing 1 pound of almonds is
almonds is
of shorts. Therefore,
comparative advantage in the production of shorts.
of shorts, and Sequoia's opportunity cost of producing 1 pound of
has a comparative advantage in the production of almonds, and
has a

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