All Problem Sets should be submitted to this page by the posted due date and time. Additionally, submissions MUST adhere to the following guidelines: All submissi

 

All Problem Sets should be submitted to this page by the posted due date and time. Additionally, submissions MUST adhere to the following guidelines:

  • All submissions should be typed (including math equations) and sent in a PDF file.
  • Assignments should be professionally presented. Your name should appear at the top of each page as a header, and pages should be numbered.
  • All graphs should be legible and accurate. Approximations and sloppy expositions are rarely sufficient for receiving credit.

Name: _______________________________

ECO 6936: Global Trade and Policy

Problem Set 1

Question 1

Costa Rica and Panama both produce avocados and bananas. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. Costa Rica is endowed with 14,000 units of labor, and Panama is endowed with 6,000 units of labor. The unit labor requirements are given as:


Costa Rica


Panama

Unit Labor Requirement for Avocados

aA=0.70

aA=0.75

Unit Labor Requirement for Bananas

aB=0.50

AB=0.25

Part (i): Construct each country’s PPF.
Place the quantity of avocados (measures in thousands) on the horizontal axis and the quantity of bananas (measured in thousands) on the vertical axis.

Part (ii): Which country has the comparative advantage in the production of avocados?

Part (iii): Which country has the comparative advantage in the production of bananas?

Question 2

Consider two countries, the United States and Canada, that each produce only two goods, lumber and steel. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. The figure below depicts each country’s PPF. PPFU is the United States’ PPF, and PPFC is Canada’s PPF.

Part (i): Which country has the absolute advantage in the production of lumber?

Part (ii): Which country has the absolute advantage in the production of steel?

Part (iii): Which country has the comparative advantage in the production of lumber?

Part (iv): Which country has the comparative advantage in the production of steel?

Question 3

Consider two countries, the Portugal and Spain, that each produce only two goods, ham and cod fish. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. The figure below depicts each country’s PPF. PPFP is Portugal’s PPF, and PPFS is Spain’s PPF.

Part (i): Suppose that Portugal has 40 available units of labor each week. What is Portugal’s unit labor requirement for producing units of ham?

Part (ii): Suppose that Spain’s unit labor requirement for producing cod fish is 0.40. How many units of labor does Spain have available each week?

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All Problem Sets should be submitted to this page by the posted due date and time. Additionally, submissions MUST adhere to the following guidelines:

All submissions should be typed (including math equations) and sent in a PDF file.
Assignments should be professionally presented. Your name should appear at the top of each page as a header, and pages should be numbered.
All graphs should be legible and accurate. Approximations and sloppy expositions are rarely sufficient for receiving credit.





Name: _______________________________


ECO 6936: Global Trade and Policy


Problem Set 1



Question 1

Costa Rica and Panama both produce avocados and bananas. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. Costa Rica is endowed with 14,000 units of labor, and Panama is endowed with 6,000 units of labor. The unit labor requirements are given as:








Costa Rica






Panama







Unit Labor Requirement for Avocados



aA=0.70


aA=0.75





Unit Labor Requirement for Bananas



aB=0.50


AB=0.25






Part (i): Construct each country’s PPF.
            Place the quantity of avocados (measures in thousands) on the horizontal axis and the quantity of bananas (measured in thousands) on the vertical axis.


Part (ii): Which country has the comparative advantage in the production of avocados?
        

Part (iii): Which country has the comparative advantage in the production of bananas?
        


Question 2

Consider two countries, the United States and Canada, that each produce only two goods, lumber and steel. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. The figure below depicts each country’s PPF. PPFU is the United States’ PPF, and PPFC is Canada’s PPF.





Part (i): Which country has the absolute advantage in the production of lumber?
        

Part (ii): Which country has the absolute advantage in the production of steel?
        

Part (iii): Which country has the comparative advantage in the production of lumber?
        

Part (iv): Which country has the comparative advantage in the production of steel?
        

Question 3

Consider two countries, the Portugal and Spain, that each produce only two goods, ham and cod fish. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. The figure below depicts each country’s PPF. PPFP is Portugal’s PPF, and PPFS is Spain’s PPF.






Part (i): Suppose that Portugal has 40 available units of labor each week. What is Portugal’s unit labor requirement for producing units of ham?
        

Part (ii): Suppose that Spain’s unit labor requirement for producing cod fish is 0.40. How many units of labor does Spain have available each week?
        


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