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The PC 5. According to the Wall Street Journal (August 30, 2007, “In the Balance"), it takes about 30 hours to assemble a vehicle in the United States. Let's use that fact plus a few invented numbers

The PC 5. According to the Wall Street Journal (August 30, 2007, “In the Balance"), it takes about 30 hours to assemble a vehicle in the United States. Let's use that fact plus a few invented numbers to sum up the global division of labor in auto manufacturing. In international economics, "North" is shorthand for the high- tech developed countries of East Asia, North America, and Western Europe, while "South" is shorthand for the rest of the world. Let's use that shorthand here. a. Consider the productivity table below: Which region has an absolute advantage at making high-quality cars? And low- quality cars? Number of Hours to Make One High-Quality Car Number of Hours to Make One Low-Quality Car North 30 20 South 60 30
b. Using the information in the productivity table above, estimate the opportunity cost of making high- or low-quality cars in the North and in the South. Which region has a comparative advantage (i.e., lowest opportunity cost) for manufacturing high-quality cars? For low-quality cars? Opportunity Cost of Making One High-Quality Car low-quality cars low-quality cars Opportunity Cost of Making One Low-Quality Car high-quality cars high-quality cars North South c. There are 1 million hours of labor available for making cars in the North, and another 1 million hours of labor available for making cars in the South. In a no-trade world, let's assume that two-thirds of the auto industry labor in each region is used to make high quality cars and one third is used to make low quality cars. Solve for how many of each kind of car will be produced in the North amul South, and add

The PC 5. According to the Wall Street Journal (August 30, 2007, “In the Balance), it takes about 30 hours to assemble a veh
b. Using the information in the productivity table above, estimate the opportunity cost of making high- or low-quality cars i
Page < 77 of 929 — ZOOI up to determine the total global output of each type of car. (Why will both kinds of cars be made? Be
output in each kind of car higher than before? (Well solve a problem with the final step of trade in the Thinking and Proble

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