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    Problem:: Gains From Specialization

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    The document discusses gains from specialization and trade between Malaysia and the US based on their production possibilities tables, finding that Malaysia has a lower opportunity cost of clothing compared to grain while the US has a lower cost of grain compared to clothing, so both countries would benefit from specializing and trading. It also examines consumer and producer surplus in a watermelon market, calculating the surplus received by a consumer willing to pay $8 and a producer requiring $5 to sell.

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    Problem:: Gains From Specialization

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    58 views2 pages
    The document discusses gains from specialization and trade between Malaysia and the US based on their production possibilities tables, finding that Malaysia has a lower opportunity cost of clothing compared to grain while the US has a lower cost of grain compared to clothing, so both countries would benefit from specializing and trading. It also examines consumer and producer surplus in a watermelon market, calculating the surplus received by a consumer willing to pay $8 and a producer requiring $5 to sell.

    Original Description:

    Economic Analysis

    Original Title

    Eco_Example_Problems

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    The document discusses gains from specialization and trade between Malaysia and the US based on their production possibilities tables, finding that Malaysia has a lower opportunity cost of clothing compared to grain while the US has a lower cost of grain compared to clothing, so both countries would benefit from specializing and trading. It also examines consumer and producer surplus in a watermelon market, calculating the surplus received by a consumer willing to pay $8 and a producer requiring $5 to sell.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    58 views2 pages

    Problem:: Gains From Specialization

    Uploaded by

    Guess Who
    The document discusses gains from specialization and trade between Malaysia and the US based on their production possibilities tables, finding that Malaysia has a lower opportunity cost of clothing compared to grain while the US has a lower cost of grain compared to clothing, so both countries would benefit from specializing and trading. It also examines consumer and producer surplus in a watermelon market, calculating the surplus received by a consumer willing to pay $8 and a producer requiring $5 to sell.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    Gains from specialization

    Problem:

    The production possibilities tables for Malaysia and the United States are shown
    in the tables below. Before specialization and trade, Malaysia's optimal product
    mix is given by alternative C while optimal production in the U.S. is alternative J.

    Malaysia Production
     
    Possibilities

    Product A B C D E

    Clothin
    20 15 10 5 0
    g

    Grain 0 3 6 9 12

      U.S. Production Possibilities

    Product G H I J K

    Clothin
    32 24 16 8 0
    g

    Grain 0 10 20 30 40

    a. What is Malaysia's marginal opportunity cost of clothing? Of grain?

    b. What is the U.S. marginal opportunity cost of clothing? Of grain?

    c. Should these two countries specialize? If so, in what products should they
    specialize?

    d. What is the total gain in production that could be achieved through


    specialization?
    Consumer and producer surplus
    Suppose the market for watermelons can be described by the graph below.

    a. If Jon is willing to pay as much as $8 for a watermelon, how much


    surplus would he receive if he pays the market price for a watermelon?
    b. Suppose Figgy Farms requires at least $5 per watermelon to be willing
    to sell in this market. What is Figgy's producer surplus for one
    watermelon in this market?

    How much total consumer surplus is received in this market?

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