3. (a) Consider a standard Hecksher-Ohlin world, with the following endowment of production factors: Home Foreign 20 Labour 45 Capital 15 There are two goods: Computer (C), which are capital intensive, and T- shirts (T), which are labour intensive. 10 i. Based on the table above, explain what are the expected patterns of trade in this world. ii. Based on your answer above, explain, who in this example, stands to gain from free trade and who stands to lose. iii. Suppose for a moment that the relative price of computers is fixed at PC/P, and there is a sudden increase in the available labour in Home. Explain what will

3. (a) Consider a standard Hecksher-Ohlin world, with the following endowment of production factors: Home Foreign 20 Labour 45 Capital 15 There are two goods: Computer (C), which are capital intensive, and T- shirts (T), which are labour intensive. 10 i. Based on the table above, explain what are the expected patterns of trade in this world. ii. Based on your answer above, explain, who in this example, stands to gain from free trade and who stands to lose. iii. Suppose for a moment that the relative price of computers is fixed at PC/P, and there is a sudden increase in the available labour in Home. Explain what will

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Output per worker Country ... Australia Brazil 300 200 Sleds Clarinets Good Suppose that Australia and Brazil have the outputs per worker in producing sleds and clarinets shown in the table above. Then Brazil has a Comparative advantage in sleds. Comparative advantage in clarinets. Absolute advantage in sleds. Absolute advantage in clarinets.
a. What are the gains to be derived from free trade? b. Illustrate, with the use of diagrams, and discuss the gains from free trade. c. Clearly explain and illustrate the gains from exchange and the gains from specialization. (rubric attached as picture)
Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods. Indonesia United States Cloth 50 3 Machines 100 5 2.3 What range of prices should be offered on international markets for both countries to benefit from trade? Explain.
Imagine that it takes an average Australian miner 10 hours to mine a metric ton of coal and 20 hours to mine a metric ton of manganese. It takes the average South African miner 4 hours to mine a metric ton of coal and 12 hours to mine metric ton of manganese.Create a table to show how productive each miner is in a day. a. In what task does each miner have a comparative advantage? b. Which resource will each country import? How about export? c. Explain how markets provide the opportunity for the mining companies to specialize and earn gains from trade.
To the right are hypothetical production possibilities tables for New Zealand and Spain. Each country can produce apples and plums. Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following:a. What is each country’s cost ratio of producing plums and apples.b. Which nation should specialize in which product? c. Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples. (Plot these lines on your graph.) d. Suppose the optimum product mixes before specialization and trade were alternative B in New Zealand and alternative S in Spain. What would be the gains from specialization and trade?
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The Power of Trade and Comparative Advantage: End of Chapter Problem “Opportunity cost” is one of the tougher ideas in economics. Let’s make it easier by starting with some simple examples. In the following examples, find the opportunity cost: Your answer should be a rate, as in “1.5 widgets per year” or “6 lectures per month.” Assume that these relationships are simple linear ones, so that if you put in twice the time you get twice the output, and half the time yields half the output. a. Erin has a choice between two activities: She can repair one transmission per hour or she can repair two fuel injectors per hour. What is the opportunity cost of repairing one transmission? b. Katie works at a customer service center and every hour she has a choice between two activities: answering 200 telephone calls per hour or responding to 400 emails per hour. What is the opportunity cost of responding to 400 phone calls? c. Deirdre has a choice between writing one more book this year or five…
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mouzitive Assignments The graph below depicts the impact of a tariff in the market for shoes. If a nation initially participates in free trade and enjoys a price of $100 per pair of shoes, then a 20% shoe tariff would reduce the welfare of domestic consumers by the total of areas A, B, PS, and T. Of these areas representing a loss to domestic consumers, click on the area(s) that would become a gain to foreign producers if the tariff were replaced with a quota for the same quantity of imports. Tariff Price Po $140 P $120 P $100- InQuizitive for Principles of Macroeconomics PS Click or tap the appropriate place in the image. Qoz Imports with a tariff Q₁ Imports without Qw Soomestic only Swith tri Domestic Sree trade Quantity (shoes)