32-7. Consider the table and answer the questions that follow.

a. What is the opportunity cost of producing modems in South Shore? Of producing flash memory drives in South Shore?

b. What is the opportunity cost of producing modems in Fast Isle? Of producing flash memory drives in East Isle?

c. Which natáon has a comparative advantage in producing modems? Which nation has a comparative advantage in producing flash memory drives?

Short Answer

Expert verified

(a) South Island does indeed have a lower overall cost of developing flashes emitters than East Shore.

(b) The cumulative idea of constructing a link over East Island be lesser than those on South shore.

Step by step solution

01

Introduction

Every advantage forfeited from the next easiest option use can be refereed to it as opportunity cost. In all other regards, this is the actual cost of something like the best route and indeed the cost of foremost alternative.

02

Given information 

The table below summarizes the development of radios and usbs upon that is between Southern Coast and thus the East Coastline:

03

Explanation (a)

(a) Incredible great potential also on South Side of town savings of Cable boxes is considered as follows:

We could see from the table above those:

South Shore Production of Flash Drives=450

South Shore Production ofModems=225

Its possibility cost can be calculated by entering the variables there in calculation elsewhere here:

Opportunity Cost=South Shore Production of Flash DrivesSouth Shore Production of Modems

=450225

=2

As both a nutshell, transmitters in Southern Edge have such an investment risk exceeding 2flashing driver every device.

04

Substitution of Modems (a)

The follows will be how the possible savings of Usb Drives in Southside gets estimated:

Opportunity Cost=South Shore Production ofModemsSouth Shore Production ofFlashdrives

=225450

=0.5

Like a conclusion, blink motorists in Southern Coast have such an actual cost of 0.5modems for memory unit.

05

Explanation (b)

b) In Eastern Shore, their possible savings of Transceivers is estimated as follows:

As could see in the table above those:

East Isle Production of Flash Drives=150

East Isle Production ofModems=300

This economic cost can be calculated by entering the variables there in expression elsewhere here:

Opportunity Cost=East Isle Production of Flash DrivesEast Isle Production of Modems

=150300

=0.5

As both a whole, the marginal utility owning broadband in East Isle is 0.5every modem chip drivers.

06

Substitution of East Isle

That follow is where the future cost of Floppy Disks in East Shore is derived:

Opportunity Cost=East Isle ProductionofModemsEast Isle Production ofFlashdrives

=300150

=2

As either a conclusion, in East Shore, that opportunity cost of memory devices is 2connections for flashed device.

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Most popular questions from this chapter

Suppose that the two nations in Problem 32-4decide to specialize in producing the good for which they have a comparative advantage and to engage in trade. Would residents of both nations find a rate of exchange of 4bottles of wine for1digital TV potentially agreeable? Why or why not?

To answer Problems 32-7and 32-8, refer to the following table, which shows possible combinations of hourly outputs of modems and flash memory drives in South Shore and neighboring East Isle, in which opportunity costs of producing both products are constant.

Consider Figure 32-3. What is the effect on U.S. textile consumers' total expenditures of the imposition of the quota that generates a movement from point E1 to point E2?

Why was it more efficient to end the quota? (Hint: Why do you think that people usually accept money in exchanges instead of engaging in barter of one good for another every time they trade?)

Some critics of the North American Free Trade Agreement (NAFTA) suggest that firms outside NAFTA nations sometimes shift unassembled inputs to Mexico, assemble the inputs into final goods there, and then export the final product to the United States in order to take advantage of Mexican trade preferences. What term describes what these critics are claiming is occurring with regard to U.S.-Mexican trade as a result of NAFTA? Explain your reasoning.

Take a look at the data in Table 32-1. Would Indian residents gain from the trade of Indian apps for U.S. tablets if the rate of exchange of tablet devices for digital apps happened to be 0.75 tablets per app?

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