Two countries, A and B, currently produce two goods, wheat (W) and steel (S). They each have a linear production possibility frontier in both goods. For Country A, if it spends all of its available resources to produce wheat, it can produce 500 units of wheat and zero units of steel. If it uses all of its resources to produce steel it can produce 250 units of steel and zero units of wheat. For Country B, if it spends all of its available resources producing wheat, it can produce 400 units of wheat, and if it spends all of its resources on the production of steel, it can produce 400 units of steel.
29.
(Scenario: Countries A and B) Given this information, Country ________ has a comparative advantage in the production of wheat and Country ________ has a comparative advantage in the production of steel.
A)
A; A
B)
A; B
C)
B; B
D)
B; A
2.
Apple company decreases the price for iPhone5 during black Friday sale while Samsung galaxy s4 does not. What will happen to the demand curve (either movements or shifts) for both iPhone and Samsung galaxy s4? Please analyze in two separate graphs, one for iPhone 5, and one for galaxy s4. (Hint: iPhone 5 and galaxy s4 are substitutes).
3.
For each of the following transactions, explain why, or why not, they would be counted in the GDP of the United States.
a. Japanese auto producer Honda builds a factory in San Antonio.
b. You buy a new pair of pants produced at a factory in Honduras.