My subject is actually
international economics, and this exercise belongs to the chapter of the Ricardian model.
7. The table shows unit labour requirements for a tonne of paper and a personal computer(PC) for two countries, Indonesia and Japan.Unit labour requirement1 ton of paper1 PCIndonesia15Japan1/22Unit labour requirement shows the number of hours of labour required to produce one unit ofgood.4a) Which country has an absolute advantage in paper production, and which in the productionof PCs? Explain.b) Which country has a comparative advantage in a paper production, and which in aproduction of PC-s? Why? Is absolute advantage a precondition for achievement of acomparative advantage?c) If Japan has 200 units of labour available, and Indonesia 300 units of labour, draw theproduction capabilities of Japan and Indonesia. Find some combinations of goods thatthese economies can consume in autarky.d) What does the production possibility frontier show? How is its slope defined?e) If a world relative price of paper is established in the international trade as Pp/Ppc = 3/9, docountries benefit from trade?
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