Ricardian Operation Management Analysis With Solution

1. Consider a world in which there are two countries: Big Industrialized Country (BIC) and Small Developing Country (SDC). BIC has a labor force of 500,000 and SDC has a labor force of 80,000.

There are two types of goods in this world—food (F) and manufactures (M), and they are both produced using only labor. The technology for producing each of these goods in each country is described by the unit labor requirements in the following table:

Theworldrelativedemandforfoodisgivenby: !! =!−!! !! ! !!

(a) Sketch the production possibilities frontier (PPF) for each country here. Label the intercepts.

(b) Calculate the opportunity cost and relative autarky price of food in each country. Then determine the goods in which each country has an absolute and comparative advantage. Record your answers in the table below.
BIC SDC

(c) On the graph below, construct the world relative supply curve describing the amount of food produced relative to the amount of manufactures. (Be clear about the intercepts, the points at which the RS curve is bent or kinked, and the point at which it intersects the relative demand curve RD).

Opportunity CostF
(PF/PM) in autarky
Absolute Advantage in:
Comparative Advantage in:

How it Works

How It works ?

Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.

Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.

Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id assignmentconsultancy.help@gmail.com and support@assignmentconcultancy.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.

Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.

Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.

Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.

Features

Features for Assignment Help

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.

Relevancy
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.

Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.

100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

Related Services

2. In a Ricardian world, with labor the only paid factor of production, the following table gives the constant labor requirements per unit of producing different commodities in countries X and Z.

Airplanes(A) Bicycles(B) Fertilizer(F) Radios (R) Shoes (S) T-Shirts(T)
Country X
10,000
30
20
20
10

18
Country Z

120,000
45
225
180
15

18

(a) Suppose the wage rate in country X is wX =$10, in country Z is wZ =$2, and that there are no transportation costs. In a free-trade equilibrium:

• Which goods are produced only by country X?

• Which goods are produced only by country Z?

• Which goods, if any, may be produced by both countries but may still be traded?

• Which goods, if any, are non-traded?

(b) Now suppose that it costs $1,000 to transport one airplane, and that it costs $150 to transport one unit of any other good from one country to the other. Now:

• Which goods are produced only by country X?

• Which goods are produced only by country Z?

• Which goods, if any, may be produced by both countries but may still be traded?

• Which goods, if any, are non-traded?

3. Assume that labor is the only factor in the production of electronics and clothing in the U.S. and Mexico. Suppose that unit labor requirements in each industry, for each country, is as shown in the following table:

Computer Shirts
chips
U.S. 2 4
Mexico. 20. 10

Suppose that the wage rate in the U.S. is wUS = 5 $/hr.

(a) For what range of Mexican wages will the two countries trade?

(i.e. what is the range of possible equilibrium wages in Mexico under perfect competition and free trade?) (Express in terms of $.)

Suppose that Mexican labor productivity doubles in both industries.

(b) Now what is the range of Mexican wages under free trade and perfect competition?

(c) TRUE OR FALSE (Explain your answer briefly). After the rise in Mexico’s productivity, Mexico will have a cost advantage in both industries, and therefore, the U.S. will not be able to export anything unless U.S. wages are reduced.

4. Migration.The graph below shows the MPL as a function of the amount of labor for two economies: Home and Foreign. Home’s origin is at the bottom left corner and Foreign’s is at the bottom right. Home country workers initially earn a real wage of 20.

Product Code :Opt07

To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)

You can also email us at assignmentconsultancy.help@gmail.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.

Summary