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Consider the example shown in Tables 2–1 and 2–2. Suppose a single number changes: The shirt output per hour in the North is four shirts instead of six shirts. To specialize, a North household switches one hour from bread to shirts, and a South household switches two hours from shirts to bread. The exchange rate is three shirts for two loaves. There are scale economies in exchange, and a transaction takes 30 minutes to execute. a. The gains from trade are _____ for North and _____ for South. b. A trading city [will/won’t] develop because. . . . c. Suppose an innovation in transportation decreases the transaction time. A trading city will develop if the transaction time is less than _____ minutes because. . . .
Chapter 2, Problem 1(choose chapter or problem)
Innovation and Trading Cities: Numbers
Consider the example shown in Tables 2–1 and 2–2. Suppose a single number changes: The shirt output per hour in the North is four shirts instead of six shirts. To specialize, a North household switches one hour from bread to shirts, and a South household switches two hours from shirts to bread. The exchange rate is three shirts for two loaves. There are scale economies in exchange, and a transaction takes 30 minutes to execute.
a. The gains from trade are _____ for North and _____ for South.
b. A trading city [will/won’t] develop because. . . .
c. Suppose an innovation in transportation decreases the transaction time. A trading city will develop if the transaction time is less than _____ minutes because. . . .
Questions & Answers
QUESTION:
Innovation and Trading Cities: Numbers
Consider the example shown in Tables 2–1 and 2–2. Suppose a single number changes: The shirt output per hour in the North is four shirts instead of six shirts. To specialize, a North household switches one hour from bread to shirts, and a South household switches two hours from shirts to bread. The exchange rate is three shirts for two loaves. There are scale economies in exchange, and a transaction takes 30 minutes to execute.
a. The gains from trade are _____ for North and _____ for South.
b. A trading city [will/won’t] develop because. . . .
c. Suppose an innovation in transportation decreases the transaction time. A trading city will develop if the transaction time is less than _____ minutes because. . . .
ANSWER:Step 1 of 4
Given data:
Consider the example shown in Tables 2–1 and 2–2. Suppose a single number changes: The shirt output per hour in the North is four shirts instead of six shirts. To specialize, a North household switches one hour from bread to shirts, and a South household switches two hours from shirts to bread. The exchange rate is three shirts for two loaves. There are scale economies in exchange, and a transaction takes 30 minutes to execute.
