a.England has the absolute advantage in scones & Scotland has the absolute advantage in sweaters. England has the comparative advantage in producing scones and Scotland has the comparative advantage in producing sweaters. b.Scotland would produce sweaters and trade them for scones to England because they will be getting a good at a lower opportunity cost if they produced it in their own country. c.Yes, both countries would still gain from trade because England would still have a higher opportunity cost for producers sweaters than Scotland. Chapter 4:
5. Technology advances have affected the market for computers by increasing the supply causing a shift to the right, which has also increased the demand for computer software, also lowering the price. As for typewriters it has decreased the demand because computers are becoming more affordable because they are cheaper to make. 10.
a.Submitting graph in class. Equilibrium price is $6.00 and quantity is 81 pizzas. b.There would be a surplus so the producers would have to cut the price to get rid of surplus inventory. c.There would be a shortage and the producers would raise the price until the shortage is reduced. Additional homework problems:
1)Opportunity cost of 1 parasol for Huang is 1/3 of a plate. 2)Opportunity cost of 1 parasol for Min ½ of plate.
3)Opportunity cost of 1 plate for Huang is 3 parasols.
4)Opportunity cost of 1 plate for Min is 2 parasols.
5)Neither because it takes them both the same amount of labor hours to produce the same amount of parasols. 6)Min because she has lower input of producing plates.
7)Huang has the comparative advantage of producing parasols because his opportunity cost is lower. 8)Min has the comparative advantage of producing plates because the opportunity cost of producing one plate is only 2 parasols. 9) A.
1)Equilibrium price= 25 Equilibrium quantity= 400
2)400 units would be supplied and demanded....