Combination Health Care All Other Goods
A 0 100
B 25 90
C 50 70
D 75 40
E 100 0
b. What is the opportunity cost of combination C?
c. Suppose a second nation has the following data. Plot
the PPC, and then determine which nation has the
comparative advantage in which activity. Show
whether the
two nations can gain from specialization
and trade.
Combination Health Care All Other Goods
A 0 50
B 20 40
C 40 25
D 60 5
E 65 0
0,2 = (V * Ц) - 6000 / (V *Ц). вот попробуй мне цену вырази из �того выражени�?(Ц), где V=100
0,2 = (V * Ö) - 6000 / (V *Ö). âîò ïîïðîáóé ìíå öåíó âûðàçè èç ýòîãî âûðàæåíèÿ?(Ö)
b. To calculate the opportunity cost of combination C, we need to compare it with the alternative combinations available. In this case, combination C produces 50 units of healthcare and 70 units of all other goods. The alternative combination is B, which produces 25 units of healthcare and 90 units of all other goods.
To calculate the opportunity cost, we need to find the difference in healthcare output between the two combinations. So the opportunity cost of combination C is 50 - 25 = 25 units of healthcare. This means that by producing combination C, the nation would have to give up 25 units of healthcare.
c. To determine which nation has the comparative advantage in which activity, we need to compare the opportunity costs of producing healthcare and all other goods for both nations.
For the first nation:
- The opportunity cost of producing healthcare is the change in healthcare output divided by the change in all other goods output. From combination B to C, the change in healthcare output is 25 units (50 - 25), and the change in all other goods output is -20 units (70 - 90). So the opportunity cost of healthcare for the first nation is 25 / -20 = -1.25 units of all other goods.
- The opportunity cost of producing all other goods is the change in all other goods output divided by the change in healthcare output. From combination B to C, the change in all other goods output is -20 units, and the change in healthcare output is 25 units. So the opportunity cost of all other goods for the first nation is -20 / 25 = -0.8 units of healthcare.
For the second nation:
- The opportunity cost of producing healthcare is the change in healthcare output divided by the change in all other goods output. From combination B to C, the change in healthcare output is 20 units (40 - 20), and the change in all other goods output is -15 units (25 - 40). So the opportunity cost of healthcare for the second nation is 20 / -15 = -1.33 units of all other goods.
- The opportunity cost of producing all other goods is the change in all other goods output divided by the change in healthcare output. From combination B to C, the change in all other goods output is -15 units, and the change in healthcare output is 20 units. So the opportunity cost of all other goods for the second nation is -15 / 20 = -0.75 units of healthcare.
Comparing the opportunity costs, we can see that the first nation has a lower opportunity cost for producing healthcare (-1.25) compared to the second nation's opportunity cost of healthcare (-1.33). This means that the first nation has a comparative advantage in producing healthcare, while the second nation has a comparative advantage in producing all other goods.
Since each nation has a comparative advantage in one activity, they can both gain from specialization and trade. The first nation can focus on producing healthcare and trade the excess for all other goods from the second nation, while the second nation can focus on producing all other goods and trade the excess for healthcare from the first nation. This specialization and trade will allow both nations to consume more of both goods than they could produce by themselves.