Suppose That a Worker in Taiwan Can Make 2 TVs

question 141

Essay

Suppose that a worker in Taiwan can make 2 TVs or 10 pairs of shoes per week, and a worker in Korea can make 3 TVs or 20 pairs of shoes per week.
a. In what sense do TVs and shoes cost less in Korea than in Taiwan?
b. In what sense do TVs cost less in Taiwan than in Korea?
c. If Taiwan and Korea were to engage in trade, which country would export which good?
d. How would the answer to the question in part c change if a worker in Korea could make 4 TVs per week?

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Definitions:

Indicator Variables

Indicator Variables, also known as dummy variables, are numeric variables used in statistical models to represent categorical data with two or more categories.

Regression Model

A statistical technique used to analyze and model the relationship between a dependent variable and one or more independent variables.

Logistic Regression

A statistical method used for predicting binary outcomes based on one or more independent variables.

Indicator Variables

Variables used in statistical models to represent subgroups with values typically set to 0 or 1, indicating the absence or presence of a characteristic.