2. (a) Two countries A and B produce five commodities. Labour is the only factor ofproduction. The unit labour requirements for each of the five goods in the two countries isgiven below:Commodities Unitlabour requirementin Unitlabour requirement inCountry ACountry BApple108.Wheat20Cloth515Dates324Cement510The relative wage in Country A is five times that of Country B. Determine the pattern oftrade between the two countries in the absence of trade costs. If trade costs of 100 percentare added to wheat and to cloth how does the trade pattern change?(b) Country X, which is a new entrant in the smartphone market, is planning to launch its newsmartphone in the international market. However, it has a threat that Country Y (which isan incumbent) might launch a similar smartphone and can capture the international market.Following matrix shows the payoffs of the two countries for launching the smartphone.What is the amount of subsidy that Country X should give to its producers to deter the entryof Country Y in the international market? Is this subsidy justifiable given that Country Yis incumbent in the market? DiscussCountry XDo not launchLaunch(-10,-10)(0,150)(150,0)(0,0)LaunchCountry YDo not launch

The total number of buyers and sellers in a given area or region is referred to as a market. The…

2. (a) Two countries A and B produce five commodities. Labour is the only factor of production. The unit labour requirements for each of the five goods in the two countries is given below: Commodities Unit labour requirement in Unit Country A labour requirement in Country B Apple Wheat 10 8 20 Cloth 5 15 Dates 3 24 Cement 10 The relative wage in Country A is five times that of Country B. Determine the pattern of trade between the two countries in the absence of trade costs. If trade costs of 100 percent

2. (a) Two countries A and B produce five commodities. Labour is the only factor of production. The unit labour requirements for each of the five goods in the two countries is given below: Commodities Unit labour requirement in Unit Country A labour requirement in Country B Apple Wheat 10 8 20 Cloth 5 15 Dates 3 24 Cement 10 The relative wage in Country A is five times that of Country B. Determine the pattern of trade between the two countries in the absence of trade costs. If trade costs of 100 percent

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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29. Which country is exporting cloth? a) Portugal b) England c) Neither d) Both e) Cannot tell
26. What are the implied relative price of wine in international trade? a) 1/3 yard/bottle b) 3 yards/bottle c) 1/2 yard/bottle d) -1/2 yard/bottle e) 2 yards/bottle f) 1/3 bottle/yard g) 2 bottles/yard h) -3 bottles/yard i) 2/3 bottles/yard
6) The trade model of the "factor endowment theory" maintains that a. Comparative advantage determines the distribution of the gains from trade b. Absolute advantage determines the distribution of the gains from trade A country exports goods for which its resource endowments are most suited C. d. The division of labor is limited by the size of the world market
!NO NEED FOR EXPLANATIONS! Answer the questions 6,7,8... Thank you.
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2) If technological change allows on industry to save on the use of the factor it uses relatively less intensively, what will happen? What is the impact of this situation on trade volume? EXPLAIN. (you can give the example) 3) Which trade theory/model can better explain trade between countries today?
QUESTION 36 The phenomenon that occurs when high-cost domestic producers are replaced by low-cost producers within the free trade are is called O A. trade alteration. B. trade qualification. C. trade creation. D. trade diversion.
Q95 The division of the gains from trade between two trading countries depends on the... a. Long-run costs. b. Quantity of resources held by each country. c. Level of unemployment in both countries. d. Size of the absolute advantages possessed by each country. e. Difference between the terms of trade and the countries' autarkic relative prices.
5. Suppose a capital abundant country, such as Germany, is entering a free trade agreement with a resource- rich country such as Norway. (YOU DO NOT NEED TO USE A DIAGRAM FOR THIS QUESTION) (a) Explain the pattern of trade, as predicted by Heckscher Óhlin Theorem, between these two nations if they have the same technology and same taste. (b) Explain what happens to price of exports and imports in each country in the post-trade environment. (c) Does trade between these two countries create winners and losers? Explain your answer by discussing what happens to real wages and real returns to resources in these nations. (d) Does the concept of "magnification effect" as predicted by Stolper- Samuelson Theorem apply to your answer in part (c)? Why?
(a) India started to shift away from import substitution development strategy since early 1990s as evidenced by sharp drop in tariff rates in this period. 1. true 2. false
3) According to the World Trade Organization; Which intervention tool should countries prefer when they have to intervene in foreign trade? (One sentence answer)