What would be the production possibility frontiers for Brazil and the United States?
The purpose of production possibility frontier is to give a detailed analysis of the costs of opportunity in the process of production for particular products. From the case study above, it is evident that the PPF can be done using small details that resemble the one provided in the question. To develop the PPF, the economic elements that are concerned primarily in the country that usually produces two products can be done in the form of production possibilities, the given output as well as the changing output, and lastly by the use of Pareto production efficiency. For the above case, the possibility frontier of the US is expected to be high as compared to that of Brazil because America is more capital oriented as compared to its counterpart Brazil.
Using what you have learned and any independent research you may conduct, which product should each country specialize in, and why? Using what you have learned and any independent research you may lead, which product should each country specialize in, and why?
In the analysis, when the different ideas concerning both absolute as well as a comparative advantage are brought forward together in analyzing the process of production that is involved here, it is evident that the two nations have different strengths in either one of the two products that are producing. This concept is mainly based on the idea of the costs that are used in producing goods. For instance, in the case of the US is considered, the total expenses used in the production of cans of soda as when compared to the creation of clothing would be 32,500/125000= 0.26. Nevertheless, in Brazil, the costs will go for 50,000/25,000=2. Form the analysis of the two values of production; it is clear that the US should think more of its concentration in the creation of the soda. However, Brazil, on the other hand, needs to have more of its focus on the production of clothing. It is believed that the main reason why a country should specialize in one specific good in its output is that that particular nation would become self-sufficient as far as its boundaries are concerned. Don't use plagiarised sources.Get your custom essay just from $11/page
What is labour-intensive good?
It refers to those products that a country requires a significant amount of labour to produce them, especially in the labour-intensive industries. To determine the labour-intensive unit, one needs to find out the amount of capital that is required to provide those goods, and it is usually referred to those firms that produce agriculture, food services, as well as mining. This is an indication that if the labour cost outweighs the cost of capital of a given product, then, that can be classified as a labour-intensive product. For instance, if we were to have a look in the above case study, clothing would be definitely be classified under labour intensive right product. It can be argued that the process of producing the cloth requires various kinds of work almost at every stage. There should be the use of manual labour to make sure that at least the fined outcome is achieved. Thus, it comprises the use of labour-intensive part of the production. However, on the other hand, the creation of the cans of soda is manifest that there is the use of an automated process as well as the purchased ingredients. Because of this, it cannot be categorized as the labour-intensive good, but rather it falls under the category of capital intensive sound.
What is the Marginal Rate of Transformation impact?
It is usually obtained by finding out the marginal rate of transformation (MRT). MRT refers to the price at which a particular good must be forgone so that an extra unit of another product that is assumed to have similar input values. In the above case, it is possible to use both the information that is available and graphs to find the MRT as well as the opportunity costs of each of the given goods and in a specific country. Considering the data of the US, the country currently can manage to produce 65,000 units of clothing as well as it has the ability to produce cans of soda of about 250,000. Therefore, to get the MRT=65,000C/250,000S
Therefore, MRT=0,26.
Considering the calculations, it is clear that the US in every one unit of a can of soda, there is the production of about 0.266 units of clothing. On the other hand, Brazil, the MRT=100,000/50,000
Thus, MRT=2.
According to this information that is obtained, it is evident that for every two units of clothing produced, there is also the production of one group of cans of soda. Therefore, from the above information, it is clear that for every one can of soda that Brazil produces, the country has to sacrifice, producing two units of clothing. However, the US, on the other side, can sacrifice only about 0.25 units of clothing to create one can of soda. It is a clear indication that the US should focus on producing cans, whereas Brazil, on the other hand, may decide to concentrate on producing clothing and leave the production of cans of soda.
What is a labour-abundant country?
It is a country that is considered to have a relative abundance that is greater to when compared to another country. For this case to hold, there is need to determine the country that has more labour intensity mainly when the argument is based on the wages that are paid to the workers considering that the two countries being compared have a large amount of the supply of the workers that are available. This can be done by determining the country had less minimum wage. For instance, in 2017, Brazil had a minimum wage for employees of about $4.3 per one hour while on the other side the US had a minimum wage bill of their employees at about$7.3 per hour. It is a clear implication that amongst the two countries, Brazil can be seen to have more abundant of labour as compared to its counterpart US.
What is the capital-abundant country?
It refers to a situation where the more significant part of the economy is run by the availability of capital. In the case study above, it should be noted that the United States defeats Brazil as far as various economic statistics are concerned. Statistics show that the current GDP per capita of America is about $49, 966 as compared to its counterpart Brazil that has a GDP per capita of about $11, 340. Therefore, for a country like America, most of the production done in their industries id capital oriented unlike in Brazil, where the majority of the sectors partially depends on labour intensive to produce.
Could trade help reduce poverty in Brazil and other developing countries?
It is clear that trade can, and it has ever helped lift people out of poverty. Majority of developing countries remains typically at the margin of the world markets. Therefore, implementing trade for them gives them an excellent opportunity to increase their economic growth. The business enables the poorer countries to sell the products in the international markets as they can also obtain the finished goods as well as other goods that the state cannot manage to produce. For every country, there is a need for them to have more days of exports as compared to few days of imports to make sure that the country is entirely having a surplus at any given time and its revenue increases.
For instance, in Brazil, the average number of days used to export is 13 days as compared to 17 days that the country uses to import. It can be said that Brazil is better off as compared to other countries that export much less as compared to how they import. The global average of this data is that the number of days shipped is usually 21 days as compared to the standard of 26 days that is used for importing. It is therefore clear that opening up trades for poor developing countries as well as for Brazil is a good idea of ensuring that the level of poverty in such countries is significantly reduced.