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Gemiola [76]
3 years ago
5

Suppose that Portugal and Switzerland both produce fish and olives. Portugal's opportunity cost of producing a crate of olives i

s 3 pounds of fish while Switzerland's opportunity cost of producing a crate of olives is 11 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that _____________ has a comparative advantage in the production of olives and _________ has a comparative advantage in the production of fish.
Suppose that Portugal and Switzerland consider trading olives and fish with each other. Portugal can gain from specialization and trade as long as it receives more than ___________of fish for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than __________ of olives for each pound of fish it exports to Portugal. Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of fish) would allow both Switzerland and Portugal to gain from trade?

a. 6 pounds of fish per crate of olives
b. 2 pounds of fish per crate of olives
c. 8 pounds of fish per crate of olives
d. 18 pounds of fish per crate of olives
Business
1 answer:
Rashid [163]3 years ago
4 0

Answer:

Portugal has comparative advantage in producing olives.

Switzerland has comparative advantage in producing fish.

Portugal can gain from trade if it receives more than 3 pounds of fish per crate of olives.

Switzerland can gain from trade if it receives more than 1/11 of olives for each pound of fish.

d. 18 pounds of fish per crate of olives.

Explanation:

Switzerland and Portugal both countries can produce Olives and fish. One country has advantage in producing fish while other has advantage in producing olives. Both countries can gain from trade if they find a intermediary way so that both countries can be in win win situation. It is beneficial for Portugal if it trades with Switzerland if it receives more than 3 pounds of fish.

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The demand for good X is estimated to be Qxd = 10,000 − 4PX + 5PY + 2M +
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Answer:

Explanation:

  • Given the equation ; Qxd = 10,000 − 4PX + 5PY + 2M + AX
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  • PY is the price of good Y = $100
  • M is income = $25,000
  • and AX is the amount of advertising on X = 1,000 units

a) Calculate the quantity demanded of good X ; Plugging all the values into the equation ;

= 10,000 − 4(50) + 5(100) + 2(25,000) + 1000

Qxd = 61,300units

b) Calculate the own price elasticity of demand for good ;

= d(Qxd)/dpx X px/Qxd = -4 x 50/61,300

= 0.0033. hence he demand for goods is inelastic

c) l will surely recommend lowering the price as this is evident from the value of the price elasticity of demand which is negative as such an increase in the price of their goods will give rise to total loss

d ) cross-price elasticity between goods X and Y = %change in quantity/ %change in price

e) Calculate the income elasticity of good X. Is good X normal or an inferior good? = dQ/dM X M/Q = 2(25000) /61300

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3 years ago
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Answer:

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Answer:

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6 0
3 years ago
Aloha Bags, Inc. produces student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $2
netineya [11]

Solution :

a). At the break even units, the total contribution margin = fixed expenses

  We know that : (Selling price - variable cost) x units sold = fixed expenses  

    i.e.  (20-14)x = 225,000

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                    x = 37,500

Therefore, the number of units sold, x = 37,500

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b). $\text{Contribution margin ratio} = \frac{\text{(Sales - variable cost) }}{\text{sales}}$

                                              $=\frac{20-14}{20}$

                                             = 30%

    The Breakeven sales = $\frac{\text{fixed cost}}{\text{Contribution margin ratio}}$

                                         $=\frac{225,000}{30\%}$

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c). $\text{Margin of Safety ratio } = \frac{\text{(Sales - Breakeven sales)  }}{\text{sales}}$

                                        $=\frac{1,2000,000-750,000}{1,200,000}$

                                        = 37.5%

d). Units needed :

   $(20-14)x - 225,000 = 150,000$

    $6x - 225,000 = 150,000$

    $6x = 375000$

     x=62,500  units

Therefore, the sales required = 62,500 x 20

                                                 = 125,000  

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2 years ago
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