Intermediate Microeconomics · free preview
Production, Comparative Advantage, and Trade
Adding production gives the production possibility frontier, its slope the marginal rate of transformation, the worked circle frontier carrying MRT one at (10, 10) and 1.6 at (12, 7.5), efficiency of mix requiring MRS equal MRT, and comparative advantage, opportunity cost differences, predicting the pattern of trade.
1. The frontier
The frontier
2. Efficient product mix
Efficient product mix
3. Comparative advantage
Comparative advantage
4. From box to frontier
From box to frontier
5. Reading the frontier
What does the slope of the production possibility frontier measure?
6. The product-mix condition
What does full efficiency with production require beyond producing on the frontier?
7. Comparative versus absolute
What determines the pattern of trade according to comparative advantage?
8. MRT on the circle
Compute the MRT at (12, 7.48) on the frontier x squared plus y squared 200.
9. The frontier intercept
Compute the maximum of good 1 alone, the square root of 200, and write it to two decimals.
10. Cost of specialization
Moving from (10, 10) to (12, 7.48), good 2 falls by about how much per unit of good 1 gained? Write the number to one decimal.
11. The frontier's symmetry point
What is the MRT at the allocation (10, 10) on x squared plus y squared equals 200?
12. Pushing toward the axis
The economy moves from (12, 7.48) to (14, 2) on the frontier. What happens to the MRT?
13. The corner examined
Why does producing (14.14, 0) leave the economy inefficient despite being on the frontier?
14. Comparative advantage's logic
Worker A sacrifices 2 berries per fish, worker B sacrifices 4. Who specializes in fish?
15. MRT at the symmetric point
For x squared plus y squared equal 200, compute the MRT as x over y at (10, 10), and write the number.
16. Good 2 at x of 14
On the frontier x squared plus y squared equals 200, compute y at x of 14, and write the number.
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