Suppose that in a year an American worker can produce 200 pillows or 30 televisions, while a China worker can produce 200 pillows or 18 televisions.
(a) If these countries were open to trade, which country would export pillows? Which country would benefit from trade? Explain
美國係未應該出口PILLOWS?但我D同學話係TV既？WHY?
(b) Explain the range of the price of a television (in terms of pillows) for which the two countries might trade.
econ questios
2007-11-09 7:18 pm
回答 (2)
2007-11-10 3:38 pm
✔ 最佳答案
Cost of producing 1 TV in USA: 200 / 30 = 6.67 pillowsCost of producing 1 TV in China: 200 / 18 = 11.11 pillows
What is the same thing:
Cost of producing 1 pillow in USA: 30 / 200 = 0.15 TV
Cost of producing 1 pillow in China: 30 / 200 = 0.09 TV
USA has a comparative advantage in producing TV.
China has a comparative advantage in producing pillows.
USA should export TV and China export pillows.
Trade will benefit if the price of a TV is between 6.67 pillows and 11.11 pillows. Or what is the same thing, the price of a pillow should be between 0.09 TV and 0.15 TV.
If price of TV is higher than 11.11 pillows, China will not buy TVs from USA because she can produce a TV at 11.11 pillows.
It price of TV is lower than 6.67 pillows, USA will not export any TV because it is lower than her cost of production.
2007-11-09 7:54 pm
1st of all TVs are much more expensive than pillows. If 2 countries can produce the same amount of pillows in a same length of time period, then the one which can produce less TV has a lower opporunity cost to produce pillows..............therefore
China should produce and export pillows since the opporunity cost of pillows is lower than the opporunity cost of TVs
China should produce and export pillows since the opporunity cost of pillows is lower than the opporunity cost of TVs
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