Sweatshops Case Study

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Register to read the introduction… 10). Third-world countries with sweatshops have a comparative advantage in producing clothing at a lower opportunity cost (Mankiw, 2011, p. 54-56). Sweatshops play a vital role in economic development by bringing investment, technology, and the opportunity for workers to build skills and improve their standard of living. By importing clothing, the United States is allowed to focus capital and educated and skilled workers on more lucrative ventures and enterprises aimed at advancing economic development and our standard of living (Hendrickson, 2006). Trade allows countries to specialize in the activities they do best and to benefit from a multiplicity of goods and services at lower cost (Mankiw, 2011, p. …show more content…
What is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds?

If the annual output of potatoes is increased to 800 pounds, only 300 pounds of fish can be produced. Because the production possibilities frontier is bowed outward, the opportunity cost of potatoes is highest when the economy is many pounds of potatoes and fewer pounds of fish. It is steeper at point 800/300. When producing fewer pounds of potatoes and many pounds of fish, the frontier is flatter and the opportunity cost of pounds of fish is lower. It is flatter at point 600/500 (Mankiw, 2001, p. 26-27). Answer: the opportunity cost is higher.
d. What is the opportunity cost of increasing the annual output of potatoes from 200 to 400 pounds?

If the annual output of potatoes is increased to 400 pounds, 600 pounds of fish can be produced. Because the production possibilities frontier is bowed outward, the opportunity cost of potatoes is highest when the economy is many pounds of potatoes and fewer pounds of fish. It is steeper at point 400/600. When producing fewer pounds of potatoes and many pounds of fish, the frontier is flatter and the opportunity cost of pounds of fish is lower. It is flatter at point 200/650 (Mankiw, 2001, p. 26-27). Answer: the opportunity cost is
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Due to a variety of circumstances, trade-offs can change. For example, the development and use of new fishing nets increases the pounds of fish that can be produced. Atlantis can now produce more pounds of fish compared to pounds of potatoes using the same resources. If Atlantis does not produce and pounds of fish, it can still produce 1,000 pounds of potatoes. One end point of the frontier stays the same (pounds of potatoes) but the rest of the production possibilities frontier shifts outward allowing economic growth (pounds of fish) (Mankiw, 2001, p. 28). The slope of the production possibilities frontier denotes the scale of the trade-off (Beggs,

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