4. Specialization and tradeWhen a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than itstrading partner. Then the country will specialize in the production of this good and trade it for other goods.The following graphs show the production possibilities frontiers (PPFS) for Shenandoah and Rainier. Both countries produce almonds and pistachios,each initially (l.e., before specialization and trade) producing 18 million pounds of almonds and 9 million pounds of pistachios, as indicated by the greystars marked with the letter A.PISTACHIOS (Millions of pounds)4842363024181260PPFShenandoahA0 6 12 18 24 30 36ALMONDS (Millions of pounds)4248?PISTACHIOS (Millions of pounds)48423630241812600PPF6RainierA1812243036ALMONDS (Millions of pounds)4248? As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade.PISTACHIOS (Millions of pounds)4842363024181260PPF038True6FalseA12Rainier182430ALMONDS (Millions of pounds)364248+True or False: Without engaging in international trade, Shenandoah and Rainier would not have been able to consume at the after-trade consumptionbundles. (Hint: Base this question on the answers you previously entered on this page.)Consumption After Trade

Opportunity cost is the cost of producing one good in terms of anotheranother good. Opportunity cost…

As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF || || True 6 False Rainier 12 18 24 30 36 ALMONDS (Millions of pounds) 42 48 True or False: Without engaging in international trade, Shenandoah and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) Consumption After Trade

As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF || || True 6 False Rainier 12 18 24 30 36 ALMONDS (Millions of pounds) 42 48 True or False: Without engaging in international trade, Shenandoah and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) Consumption After Trade

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

According to the resource-based view, there are economic gains from international trade because some firms in one nation generate exports that are valuable, unique, and hard to imitate that firms from other nations find it beneficial to import. O True O False
BASIL (Millions of pounds) The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A. As you did for Yosemite, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade. 64 56 48 PPF 40 32 24 16 8 0 8 16 Rainier 24 32 40 48 56 64 ALMONDS (Millions of pounds) Consumption After Trade ? True or False: Without engaging in international trade, Yosemite and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) ○ True False
Consider a region with two export products (gloves and socks) and two local goods (tattoos and manicures). The production of each export good is subject to localization economies, so each city specializes in one export good. According to Mr. Wizard, “If my two assumptions (one for export products and one for local goods) are correct, all the cities in the region will be the same size.” Assume that Mr. Wizard’s logic is correct. List his assumptions and explain why together they imply the region’s cities will be the same size.
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…
Suppose Colombia is open to free trade in the world market for soybeans. Because of Colombia’s small size, the demand for and supply of soybeans in Colombia do not affect the world price. The following graph shows the domestic soybeans market in Colombia. The world price of soybeans is PW=$400 per ton.
[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?
Consider the following table that presents the labour requirements for production in the East and West (labour hours per unit of output) Food Clothing East 10 20 West 5 15 Answer the following questions. Does the East have an absolute advantage in clothing production? Does the West have an absolute advantage in clothing production? Does the East have an absolute advantage in food production? Does the West have an absolute advantage in clothing production? Explain. Does the East have a comparative advantage in clothing production? Does the West have a comparativeadvantage in clothing production? Does the East have a comparative advantage in food production? Does the West have a comparative advantage in clothing production? Explain. In the West, what is the opportunity cost of producing one more unit of food? In the East, what is the opportunity cost of producing one more unit of food? Explain. Under free trade, where should East and West produce food and…
Consider a small country that exports good Z. Some of the total quantity of Z that is domestically produced is consumed by domestic consumers and the rest of it is exported. Then suppose that the government imposed a ban (a prohibition) on Z being exported. Show the effects of this export ban using a carefully labelled demand and supply diagram. On your diagram, shade-in the area that represent the deadweight loss caused by the export ban (please do not shade-in any other areas) and explain your reasoning.
Tricky question. Consider the diagram below, depicting the United States Market for Airplanes (hundreds of jets on the horizontal axis, and millions of dollars on the vertical axis). Suppose around the world, a 2 (million dollar) tariff is placed on United States Airplanes. What will exports of planes now be (round to one significant digit). Tricky question. Consider the diagram below, depicting the United States Market for Airplanes (hundreds of jets on the horizontal axis, and millions of dollars on the vertical axis). Suppose around the world, a 2 (million dollar) tariff is placed on United States Airplanes. Given exports, about how much will United States producers of airplanes wind up paying in tariffs?
Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1.2 million televisions per year, of which 600,000 are produced domestically and 600,000 are imported. Suppose that a technological advance among Japanese television manufacturers causes the world price to fall $800 to $700. Draw a graph to show how this change affects the welfare of Canadian consumers and Canadian producers and how it affects total surplus in Canada. Label the diagram carefully to show all the areas using letters of alphabets. (Do not shade the areas). After the fall in price, consumers buy 1.4 million televisions, of which 400,000 are produced domestically and 1 million are imported. Calculate the change (this will be only the area either gained or lost by consumers and producers) in consumer surplus, producer surplus and total surplus due to price reduction. Provide numerical answers by calculating the area of change in surplus due to fall in…
Consider two neighboring island countries called Contente and Felicidad. They each have 4 million labor hours available per month 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. Jeans Rye Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 12 24 Felicidad 8 32 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Contente produces 12 million pairs of jeans and 72 million bushels of rye, and Felicidad produces 24 million pairs of jeans and 32 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.…