EXTRA CREDIT A winter storm cuts the power supply and isolat…

EXTRA CREDIT A winter storm cuts the power supply and isolates a small town in the mountains.  People rush to buy candles from the town’s only store.  The store owner decides to keep the price of candles unchanged and, instead, rations candles one to a family. a) Who ultimately gets to use the candles distributed by the method of allocation used by the store owner? b) Who ultimately receives consumer surplus (buyer gain from trade) and producer surplus (seller gain from trade) on the exchanges of candles?

The citizens of Alphaville can produce 100 bushels of corn i…

The citizens of Alphaville can produce 100 bushels of corn in one day or produce 25 gallons of  wine in one day.  The citizens of Omegashire can produce 400 bushels of corn in one day or produce 50 gallons of wine in one day. a. Which country has the comparative advantage in wine and which has the comparative advantage in corn? b. If citizens of these two countries start to trade, which country will export wine and import corn?  Explain why.

The citizens of Alphaville can produce 100 bushels of corn i…

The citizens of Alphaville can produce 100 bushels of corn in one day or produce 25 gallons of  wine in one day.  The citizens of Omegashire can produce 400 bushels of corn in one day or produce 50 gallons of wine in one day. a. Which country has the comparative advantage in wine and which has the comparative advantage in corn? b. If citizens of these two countries start to trade, which country will export wine and import corn?  Explain why.

EXTRA CREDIT A winter storm cuts the power supply and isolat…

EXTRA CREDIT A winter storm cuts the power supply and isolates a small town in the mountains.  People rush to buy candles from the town’s only store.  The store owner decides to keep the price of candles unchanged and, instead, rations candles one to a family. a) Who ultimately gets to use the candles distributed by the method of allocation used by the store owner? b) Who ultimately receives consumer surplus (buyer gain from trade) and producer surplus (seller gain from trade) on the exchanges of candles?