Task Name: Phase
2
Deliverable Length: 1,050
– 1,200 words
Due Date: 20
Apr 15
Suppose that there are two products:
clothing and soda. Both Brazil and the United States produce each product.
Brazil CAN produce 100,000 units of clothing per year and 50,000 cans of soda.
The United States CAN produce 65,000 units of clothing per year and 250,000
cans of soda. Assume that costs remain constant. For this example, assume that
the production possibility frontier (PPF) is a straight line for each country because
no other data points are available or provided. Include a PPF graph for each
country in your paper.
Complete the following:
- What would be the production possibility frontiers for
Brazil and the United States? - Without trade, the United States produces AND CONSUMES
32,500 units of clothing and 125,000 cans of soda. - Without trade, Brazil produces AND CONSUMES 50,000
units of clothing and 25,000 cans of soda. - Denote these points on each COUNTRY’s production
possibility frontier. - Using what you have learned and any independent
research you may conduct, which product should each country specialize in,
and why?
To assist in your thinking and
discussion, additional questions to consider include:
- What is the labor-intensive good?
- What is the Marginal Rate of Transformation impact?
- What is the labor-abundant country?
- What is the capital-abundant country?
Could
trade help reduce poverty in Brazil and other developing countries?
Resources:
https://campus.ctuonline.edu/Pages/ResourceTracker.aspx?r=46911
https://campus.ctuonline.edu/Pages/ResourceTracker.aspx?r=46910
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