Question

There are 20 workers in Thailand and each can produce either 4 computers or 60 tons of rice. There are 40 workers in the United States and each can produce either 10 computers or 80 tons of rice. Draw the production possibilities curve for each country. ​1.) Using the line drawing​ tool, draw the production possibilities frontier for Thailand. Properly label your line. ​2.) Using the line drawing​ tool, draw the production possibilities frontier for the United States. Properly label your line. Carefully follow the instructions above and only draw the required objects

Answer 1

Answer:

Thailand:

Opportunity cost of computers = 300/20 = 15 tons of rice

US:

Opportunity cost of computers = 800/100 = 8 tons of rice

US has a comparative advantage in production of computers

Absence of trade:

Thailand consumes 150 tons of rice, it can consume = (300 - 150)/30 x 2 = 10 computers

US consumes 50 computers, it can consume = 400 tons of rice

After trade :

10 computers exchanged for 120 tons of rice

Thailand continues to consume 150 tons of rice, it will consume = 12 computers (=10 + 30/15)

US continues to consume 50 computers, it will consume = 440 tons of rice (=120 + 40 x 8)

Both would accept the proposal as both are better off with trade