Microeconomics
2nd Edition
ISBN: 9781259813337
Author: KARLAN, Dean S., Morduch, Jonathan
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 10PA
To determine
(a)
To find: which worker has an
To determine
(b)
To find: which worker has an absolute advantage in writing memos.
To determine
(c)
To find: which worker has a
To determine
(d)
To find: which worker has a comparative advantage in writing memos.
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As the manager at a local florist, you supervise two employees, Anita and Jerome. There are two tasks that need to be completed: floral arrangements and flower delivery. It takes Anita 30 minutes to finish one floral arrangement and it takes her 40 minutes to make one delivery. It takes Jerome 10 minutes to finish one floral arrangement and it takes him 30 minutes to make one delivery.
a. Who has a comparative advantage in floral arrangements? What about deliveries?
b. Suppose, initially, Jerome and Anita each spent 4 hours each day doing floral arrangements and 2 hours each day doing deliveries. If you changed their tasks so that each individual did nothing but the task for which they had a comparative advantage, how many more floral arrangements would your store make, and how many more deliveries?
10)Suppose that in a three-hour block of time you can either make 2 batches of chocolate chip cookies or word-process 10 pages of text. In contrast, your roommate Keshawn can either make 4 batches of cookies or word-process 5 pages of text in a three-hour block of time. Which of the following is correct *
a)Your comparative advantage is in making cookies.
b)None of the above
c)Keshawn's comparative advantage is in word-processing text.
d)Your comparative advantage is in word-processing text.
Chemicals
Italy
Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are
shown in the graphs. It can be deduced that
Multiple Choice
O
Chemicals
Greece
Greece has a comparative advantage in chemicals
Greece has the absolute advantage in both products.
Italy has a comparative advantage in chemicals.
It is more costly in terms of resources to produce steel in Italy.
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- Elif can produce 6 pies or 30cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour. On the PPF lines, show what Elif produces and what Ahmet produces when they specialize. When they specialize and trade, what are the total gains from trade? If Elif and Ahmet share the total gains equally, which quantities of pies and cakes do they trade?arrow_forwardAt the start of this unit, we discussed the decision by many clothing companies to outsource production to Bangladesh and other low-wage economies. Show your results in a single diagram. 1. Draw the best response curve of the workers in the high-wage home country in the absence of outsourcing (with the wage on the horizontal axis, and effort on the vertical axis). 2. In the same diagram show the best response curve of workers in the foreign low-wage country in the absence of outsourcing. (Assume that wages are measured in dollars in both cases.) 3. Show in your diagram what the home country employer will pay home country workers if outsourcing is not possible. 4. Show in your diagram what the home country employer will pay workers in the low- wage country if it switches production there (ignore the costs of moving production). 5. Now assume that outsourcing is possible and is widely practiced by many firms in the clothing industry. Show the best response function for home country…arrow_forwardSuppose equilibrium in the market for strawberries is disturbed by two simultaneous events: a wildfıre destroys many acres of coastal land used to plant strawberries, and blueberries (a substitute for strawberries) experience a large price increase. What would we expect to happen in the market for strawberries? The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, and the equilibrium price would increase. O The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. Both equilibrium price and equilibrium quantity would decrease.arrow_forward
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