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October 20, 2014

Homework Help: econ question part 3

Posted by tofu on Tuesday, February 13, 2007 at 11:35am.

This is the chart

Canada produces 50 wheat and 20 Microchips
Jpn produces 2 wheat and 12 Microships

the chart shows the productivity of ONE SINGLE UNIT of resource

so if the question was

Suppose that prior to the trade, each country allocated half of its resources endowment to the production of each good. What is the cobined total output given?

since it says half of the resources, i suppose the chart is now


Canada produces 25 wheat and 10 Microchips
Jpn produces 1 wheat and 6 Microships

so would the total output woud be 26 for wheat and 16 for microchips

question 2


Suppose Specialization occured btw Canada and Jpn. which good would canada and japan produce. How much of each good would be produced if both countires combined their production


i got wheat for canada and microchips for jpn
canada would produce 125 and japan would produce 20
right?

Hummmm. I would have thought you would have been give the total units of productivity resources. Assuming each country has one resource unit, your total output is correct.

2) I get canada produces all the wheat and produces 100 units. Japan produces all the microchips, and produces 12 units

how u get the question 2 answer?

Sorry, I mixed the two charts.

If Canada uses all its resources it can produce 50 wheat OR 20 chips. Pre trade, it uses half on wheat, half on chips and gets 25,10 of each. Post trade, it will use all on wheat and nothing on chips. So it produces 50 wheat, 0 chips. Japan, on the other hand, post trade, uses all resources on chips and produces 0 wheat and 12 chips. so, corrected 2) total combined production is 50 wheat and 12 chips.

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