b. What is the total gain in apparel and chemical output that would result from such specialization?Apparel:Chemicals:unitston(s)c. What are the limits of the terms of trade?units of apparel for 1 ton of chemicals andunits of apparel for 2 tons of chemicals.Suppose that the actual terms of trade are 1,000 units of apparel for 1½ tons of chemicals and that 4,000 units of apparel areexchanged for 6 tons of chemicals. What are the gains from specialization and trade for each nation?(Click to select) ✓has a gain ofunits of apparel.(Click to select)✓has a gain ofton(s) of chemicals. The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization andtrade the optimal product mix for China is alternative D and for the United States is alternative S.ProductApparelChemicals (tons)ProductApparelChemicals (tons)(Click to select) ✓China Production PossibilitiesA10,0000unitsB8,00046,0008U.S. Production PossibilitiesRS30,000 24,00006T18,00012ton(s)D4,00012U12,000018E2,00016V6,00024Instructions: Enter your answers as whole numbers.a. Are comparative-cost conditions such that the two countries should specialize?F020W030If so, what product should each produce?China should produce (Click to select)The United States should produce (Click to select) ✓b. What is the total gain in apparel and chemical output that would result from such specialization?Apparel:Chemicals:

Opportunity costs address the potential advantages that an individual, investor, or business passes…

. What is the total gain in apparel and chemical output that would result from such specialization? Apparel: Chemicals: units c. What are the limits of the terms of trade? (Click to select) ton(s) units of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals. Suppose that the actual terms of trade are 1,000 units of apparel for 1½ tons of chemicals and that 4,000 units of apparel a exchanged for 6 tons of chemicals. What are the gains from specialization and trade for each nation? has a gain of units of apparel. ✓has a gain of ton(s) of chemicals. (Click to select)

. What is the total gain in apparel and chemical output that would result from such specialization? Apparel: Chemicals: units c. What are the limits of the terms of trade? (Click to select) ton(s) units of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals. Suppose that the actual terms of trade are 1,000 units of apparel for 1½ tons of chemicals and that 4,000 units of apparel a exchanged for 6 tons of chemicals. What are the gains from specialization and trade for each nation? has a gain of units of apparel. ✓has a gain of ton(s) of chemicals. (Click to select)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The price of trade Suppose that Croatia and Wales both produce ale and broccoli. Croatia's opportunity cost of producing a bushel of broccoli is 5 kegs of ale while Wales's opportunity cost of producing a bushel of broccoli is 10 kegs of ale. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of ale. has a comparative advantage in the Suppose that Croatia and Wales consider trading broccoli and ale with each other. Croatia can gain from specialization and trade as long as it receives more than of ale for each bushel of broccoli it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of broccoli for each keg of ale it exports to Croatia. Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of ale) would allow both Wales and Croatia to gain from trade? Check all that…
4. Tariffs Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw =$250 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). 490 Domestic Demand Domestic Supply 460 CS 430 400 370 PS 340 310 280 250 220 190 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is $ and Kenya will import tons…
1. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Country Dolorium Contente Jeans Rye (Pairs per hour of labor) (Bushels per hour of labor) 20 16 Initially, suppose Contente uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Dolorium uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Dolorium produces 15 million pairs of jeans and 20 million bushels of rye, and Contente produces 8 million pairs of jeans and 48 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.…
[India is the world’s largest consumer of sugar. Assume the world price for sugar is $750 per ton.] [Assume India currently has a tariff of $50 per ton on sugar and imports 7 million tons of sugar. Show this situation in a graph. Label the quantity demanded and the quantity supplied domestically and imports clearly on a graph. Explain your graph in 3-4 sentences. How to draw the graph?
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5. The price of trade Suppose that Ireland and Liechtenstein both produce beets and wheat. Ireland's opportunity cost of producing a bushel of wheat is 5 bushels of beets while Liechtenstein's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that Ireland production of wheat and Liechtenstein has a comparative advantage in the production of beets. Suppose that Ireland and Liechtenstein consider trading wheat and beets with each other. Ireland can gain from specialization and trade as long as it receives more than of beets for each bushel of wheat it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as of wheat for each bushel of beets it exports to Ireland. long as it receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Liechtenstein and Ireland to…
3. Gains from trade Suppose there exist two imaginary countries, Everglades and Denali. Their labor forces are each capable of supplying four million hours per week that can be used to produce shorts, almonds, or some combination of the two. The following table shows the amount of shorts or almonds that can be produced by one hour of labor. Country Shorts Almonds (Pairs per hour of labor) (Pounds per hour of labor) Everglades 5 20 Denali 8 16 Suppose that initially Denali uses 1 million hours of labor per week to produce shorts and 3 million hours per week to produce almonds, while Everglades uses 3 million hours of labor per week to produce shorts and 1 million hours per week to produce almonds. As a result, Everglades produces 15 million pairs of shorts and 20 million pounds of almonds, and Denali produces 8 million pairs of shorts and 48 million pounds of almonds. Assume there are no other countries willing to engage in trade, so, in the absence of…
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1. The basis of trade Suppose that Germany and Portugal both produce cheese and wine. Germany's opportunity cost of producing a bottle of wine is 2 pounds of cheese. That is, Germany forgoes the production of 2 pounds of cheese when it produces a bottle of wine. Portugal's opportunity cost of producing a bottle of wine is 1/2 pound of cheese. a comparative advantage in the production of wine. a comparative advantage in the production of cheese.
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