The countries of Orion and Scorpius are small mountainous nations. Both produce granite and blueberries. Each nation has a labor force of 800. The following table gives production per month for each worker in each country. Assume productivity is constant and identical for each worker in each country. Orion workers Scorpius workers Bushels of Blueberries Tons of Granite 6 18 3 12 Productivity of one worker for one month a. Which country has an absolute advantage in the production of granite? Which country has an absolute advantage in the production of blueberries? b. Which country has a comparative advantage in the production of granite? Of blueberries? c. Sketch the PPF's for both countries. d. Show that specialization and trade can move both countries beyond their PPF's
The countries of Orion and Scorpius are small mountainous nations. Both produce granite and blueberries. Each nation has a labor force of 800. The following table gives production per month for each worker in each country. Assume productivity is constant and identical for each worker in each country. Orion workers Scorpius workers Bushels of Blueberries Tons of Granite 6 18 3 12 Productivity of one worker for one month a. Which country has an absolute advantage in the production of granite? Which country has an absolute advantage in the production of blueberries? b. Which country has a comparative advantage in the production of granite? Of blueberries? c. Sketch the PPF's for both countries. d. Show that specialization and trade can move both countries beyond their PPF's
Chapter18: International Trade And Comparative Advantage
Section: Chapter Questions
Problem 2TY
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