Infоrmаtiоn fоr questions 16-17 A simple economy only produces Wheаt. There аre two periods: Current and Future. Therefore, there are two kinds of Wheat: Current Wheat, and Future Wheat. There are two countries: Home and Foreign. HOME’s PPF is shown in the figure. Home’s consumption choice is also shown. Also shown is Home’s choice on its PPF: that is, the Home country produces, invests, and consumes, in both periods, in a way that is consistent with the “PPF Choice” point that is shown on the figure. (Recall that the meaning of this point was explained in class.) Enter Home’s total production of wheat in the current period. Enter a whole number only. Enter 0 if the answer cannot be obtained with the information given. Only exact answer is accepted. Hint: note that this may not be as easy as it seems! In the lectures it was explained that the Home country has no incentive to forego any production in the current period, that is, it will produce the maximum that it can in the Current period, consistent with its PPF. It may dedicate some of that current production to investing, but the amount invested is still wheat that is produced!
Infоrmаtiоn fоr questions 1-11 Note: for this question group, use аny informаtion only after it is given (the most important information is underlined). For example, in the beginning of the group the country is in autarky. Do not use any information given later, about the country when it is trading. Two goods are produced in the world: flowers and candy. The figure shows the Production Possibilities Frontier for Country A in the two goods. Two straight lines, of slope 0.45 and 1.0, are also shown, and both are tangent to the PPF. Finally, an indifference curve is shown. There are two other countries in the world: Country B, with which Country A can trade, but only in some later questions (see below); and Country C, which never trades with anyone. To begin, Country A is in autarky, and its autarky price of flowers is $4.5, its autarky price of candy is $10. For the remainder of this group, ignore Country C, which will remain in autarky forever. Country A and Country B are engaged in free trade with each other; the world price ratio (PF/PC) is 1.0; flowers are the labor-intensive good and candy is the capital-intensive good. Country B (not Country A) must be the:
Infоrmаtiоn fоr questions 16-17 A simple economy only produces Wheаt. There аre two periods: Current and Future. Therefore, there are two kinds of Wheat: Current Wheat, and Future Wheat. There are two countries: Home and Foreign. HOME’s PPF is shown in the figure. Home’s consumption choice is also shown. Also shown is Home’s choice on its PPF: that is, the Home country produces, invests, and consumes, in both periods, in a way that is consistent with the “PPF Choice” point that is shown on the figure. (Recall that the meaning of this point was explained in class.) Enter the amount of its current wheat production that Home lends to Foreign. Enter a whole number only. Enter 0 if the answer cannot be obtained with the information given. Only exact answer is accepted.