Suppose that there are two products: clothing
and soda. Both Brazil and the United States produce each product. Brazil
can produce 100,000 units of clothing per year and 50,000 cans of soda.
The United States can produce 65,000 units of clothing per year and
250,000 cans of soda. Assume that costs remain constant. For this
example, assume that the production possibility frontier (PPF) is a
straight line for each country because no other data points are
available or provided. Include a PPF graph for each country in your
paper. Chapter 5 of the Suranovic text is a good reference for this
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlinesOrder Paper Now
Complete the following:
- What would be the production possibility frontiers for Brazil and the United States?
- Without trade, the United States produces AND CONSUMES 32,500 units of clothing and 125,000 cans of soda.
- Without trade, Brazil produces AND CONSUMES 50,000 units of clothing and 25,000 cans of soda.
- Denote these points on each COUNTRY’s production possibility frontier.
what you have learned and any independent research you may conduct,
which product should each country specialize in, and why?
To assist in your thinking and discussion, additional questions to consider include:
- What is the labor-intensive good?
- What is the Marginal Rate of Transformation impact?
- What is the labor-abundant country?
- What is the capital-abundant country?
- Could trade help reduce poverty in Brazil and other developing countries?