--%>
Assignment Help - homework help

Domestic opportunity cost of production possibilities tables

Hypothetical production possibilities tables for New Zealand and Spain are given below

639_Hypothetical production possibilities.png

 

Employing a graph, draw the production possibilities data for each of the two countries. Referring to graphs, Find out:

(a) Each country's domestic opportunity cost of generating plums and apples.

(b) Which nation has to specialize in which product.

(c) The trading possibilities lines for each of the nation if the real terms of trade are 1 plum for 2 apples.

(d) Profit after trade.

 

E

Expert

Verified

(a) New Zealand’s cost ratio is 1 plum = 4 apples (or 1 apple = 1/4 plum). Spain’s cost ratio is 1 plum = 1 apple (or 1 apple = 1 plum). Illustrates in the below graphs.

(b) New Zealand has to specialize in apples, Spain in plums.

(c)  The trading possibilities lines for each of the nation if the real terms of trade are 1 plum for 2 apples is described in graph below

(d) Net production before specialization & trade: 40 apples (20 + 20) and 50 plums (10 + 40). After specialization & trade: 60 apples & 60 plums. Gain will be 20 apples and 10 plums.

 

467_Production possibilities data.png

   Related Questions in Finance Basics

  • Q : Determine the new per unit cost of

    Normal 0 false false

  • Q : What is Capital Outlay Capital Outlay

    Capital Outlay (CO): A character of expenses of funds to obtain land, plan and build new buildings, expand or transform existing buildings, and/or purchase tools associated to such construction.

    		•
  • Q : Fixed Income I need solution by Tuesday

    I need solution by Tuesday evening March 18, 6 pm EST

    		•
  • Q : How do financial managers compute the

    How do financial managers compute the average tax rate?Average tax rates are calculated through dividing tax dollars paid by earnings before taxes (EBT).

    		•
  • Q : Capital investment appraisal methods

    The capital investment appraisal methods like NPV, IRR, ARR, PV and Time value of money have become irrelevant post Celtic Tiger. Due to the depth of the recession companies do not have budgets to invest. Explain? At first use this

    		•
  • Q : Describe Section 28.50 Section 28.50 :

    Section 28.50: It is a Control Section of the Budget Act which authorizes the Department of Finance to increase or reduce the reimbursement line of an appropriation schedule for the reimbursements received from agencies of other state. It too contains

    		•
  • Q : Explain accepting or rejecting of

    For a specified IOS and MCC, how do financial managers decide which proposed capital budgeting projects to accept, and which to reject? For a specified IOS and MCC, all independent projects that plot on the IOS above the MCC are accepted. Those

    		•
  • Q : Describes why reserves are an asset to

    Normal 0 false false

    		•
  • Q : Explain the term Continuous

    Continuous Appropriation: The constitutional or statutory expenses authorization that is renewed each year without additional legislative action. The amount obtainable might be particular, recurring sum each year; all or a specified part of the procee

    		•
  • Q : Describe the importance of additional

    Normal 0 false false