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This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.

Digital Camera Wheat
(bushels ) Quantity of Digital Camera Quantity of Wheat
China 100 hours 5 hours 90 1800
South Korea 90 hours 3 hours 100 3,000

a- Suppose the two countries specialize and trade. Who should produce digital cameras and who should produce wheat? Explain your answer.

b- Draw the production possibilities frontier for each country. Put "Digital Camera" on the horizontal axis and "Wheat" on the vertical axis. Be sure to identify the intercept values on your graphs.

c- Suppose each country allocates 60% its labor hours to wheat production and 40% to the production of digital cameras. China will produce 36 digital camera and 1,080 wheat and South Korea 40 digital camera and 1,800 wheat. If the two countries do not trade and consume whatever they produce, identify the current production and consumption point for each country on their respective production possibilities frontiers. Label China’s consumption point “C” and South Korea’s consumption point, “K.

d- Suppose China and South Korea agree to trade so that in exchange for 1,200 bushels
of wheat, the exporter of wheat receives 48 digital cameras. Show the consumption points after trade on each country’s production possibilities frontier. Label these points “B” for China and “J” for Korea

  • economics - ,

    In the first place, with no spaces or division I can not be sure what goes where.


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