Question

Refer to your answers to Problem $32-7$when answering the following questions.

a. Which one of the following rates of exchange of modems for flash memory drives will be acceptable to both nations: (i) $3$modems for $1$flesh drive; (ii) $1$modem for $1$flash drive; or (iii) $1$flash drive for $2.5$modems? Explain.

b. Suppose that each nation decides to use all available resources to produce only the good for which it has a comparative advantage and to engage in trade at the single feasible rate of exchange you identified in part (a). Prior to specialization and trade, residents of South Shore chose to produce and consume $30$modems per hour and $90$flash drives per hour, and residents of East Isle chose to produce and consume $40$modems per hour and $30$flash drives per hour. Now, residents of South Shore agree to export to Fast Isle the same quantity of South Shore's specialty good that Fast Isle residents were consuming prior to engaging in international trade. How many units of East Isle's specialty good does South Shore import from East Isle?

c. What is South Shore's hourly consumption of modems and flash drives after the nation specializes and trades with East Isle? What is East Isles hourly consumption of modems and flash drives after the nation specializes and trades with South Shore?

d. What consumption gains from trade are experienced by South Shore and East Isle?

Short answer

a. $1$Memory Card for $2.5$Cable boxes is true, for producing $1$Usb Stick equates manufacturing $2.5$Wireless routers.

b. To produce goods $40$terminals per hour as well as $40$storage devices,

c. The East Isle eats $30$ broadband as well as $80$storage devices per hour.

d. $10$units of transmitters and East Lake obtains $50$units of floppy disks.

Step-by-step solution

Introduction

This same potential of a company or indeed a community to supply an item or services at a lower opportunity cash flow over some other manufacturer is known to this as market economics.

Given Information

There economic cost of telecommunications is

• $2$flash disks per transmission mostly on South Shore and
• $0.5$per broadband here on East Isle.

That economic cost of memory driver is

• $0.5$modems for blinding carrier upon that South Shore and
• $2$modems every device motorist mostly on East Isle.

Explanation (a)

a) This same theoretical process of manufacturing transmitters near Southern Coast is $2$and then a memory card is $0.5$, as shown in above information. The marginal utility of routers is $0.5$, meanwhile the value of Floppy Disks is $2$.

Southwest Side does indeed have a lesser cost of building flashes emitters that Eastern Shore. As either a reason, Lakeshore nations holds a market edge in flash memory industry.

As either a result, $1$Memory Card for $2.5$Cable boxes is true, for producing $1$Usb Stick equates manufacturing $2.5$Wireless routers.

Explanation (b)

b) If somehow the Beachfront community tries to build as well as consumes $30$transmissions per hour including $90$floppy disks, while an East Lake society wants to produce goods $40$terminals per hour as well as $40$storage devices, every Lakeshore society can imported $10$units of transmitters out from East Isle. There is no Flash Devices imported from Southern Coast to East Isle.

Explanation (c)

(c) Just after kingdom concentrated that negotiated on East Isle, and South Shore's everyday demand of Transceivers and Storage Devices has climbed to $40$per hour. On comparison, the East Isle eats $30$ broadband as well as $80$ storage devices per hour.

Explanation (d)

(d) Through terms of trade between East Shore, South Side receives $10$units of transmitters and East Lake obtains$50$ units of floppy disks.