PLEASE ANSWER THE QUESTION USING THIS: WITH EXPLANATION AND COMPUTATION Suppose

Question

PLEASE ANSWER THE QUESTION USING THIS: WITH EXPLANATION AND COMPUTATION

Suppose that, in France, the prices of Bikes and Cars are 10% and 50%, respectively.

PLEASE WRITE THE ANSWER DIRECTLY IN THE TEXT...

China and France produce Bikes and Cars. Both goods are manufactured using only one production factor (LABOR). The following table shows the unit labor requirements for each product in each country.

BIKE

CAR

CHINA

2 Hrs.

16 Hrs.

FRANCE

8 Hrs.

8 Hrs.

NOTE: CHINA HAS 10,000 WORKERS AND FRANCE HAS 5,000 WORKERS.

QUESTION:

Suppose that, in France, the prices of Bikes and Cars are 10% and 50%, respectively.

What good are the French workers going to produce?

BIKE

CAR

CHINA

2 Hrs.

16 Hrs.

FRANCE

8 Hrs.

8 Hrs.

Explanation / Answer

France will produce cars as MPLcar is greater than MPLbike so france will produce car because the opportunity cost of producing car is less for france.

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