Assume that an American worker can produce 5 cars per year or 10 tons of grain per year,whereas a Japanese worker can produce 15 cars per year or 5 tons of grain per year. Assumelabor is the only input used in car and grain production. If free trade is allowed, whichcountry will import cars? Which country will import grain? Explain and show your work.

When two countries produce two goods and ready to make international transactions, a country will…

Answered: Assume that an American worker can…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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international trade Consider a Ricardian model with two countries, the US and Ecuador, producing two goods, bananas and machines. Suppose the unit-labor requirements are: aLBUS= 8, aLBE = 4, aLMUS = 2, aLME = 4. Let the US have 3200 workers and Ecuador have 400 workers. a. What would the pattern of trade be in free trade? Why?
Most economists international trade because Select the correct answer below: oppose; it hurts domestic producers and special interest groups oppose; they believe that other countries engage in unfair competition through dumping and other predatory pricing O support; the gains from trade exceed the costs and can be redistributed to make everyone better off O support; it lowers prices for consumers and that is more significant than the cost of lost jobs in domestic production
Consider two countries Home and Foreign producing goods using only one factor of production, Labor. These are the marginal products of labor. Home has 100 people and foreign has 50 people. Home: Wheat 4 bushels Cloths 2 yards Foreign: Wheat 1 bushel Cloths 1 yard Assuming there is no trade, draw production possibility frontiers of two countries. With no trade, what are the relative prices of wheat and cloths in two countries? What will happen when they begin to trade?
Suppose that companies in US can manufacture, using one year of labor, 10 units of machinery and 200 tons of corn. Companies in Mexico, using the same input of labor, can manufacture 6 units of machinery and 180 tons of corns. A-Which trade theory can best demonstrate the benefits of trade in this example and explain? B - Explain whether each county can specialize in production of one product or not and determine which product to specialize.
You may need to refer to the textbook, or use some mathematical intuition, for this question. A country will be able to consume a combination of goods that is not attainable solely from domestic production if: a. the country avoids international trade. b. the country specialises in one product. c. the country’s domestic production value equals world relative value. d. the world terms of trade differ from the domestic relative costs. e. the world terms of trade equal the domestic relative costs.
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“The U.S. and Mexico can gain from trade with one another by taking advantage of the low cost of producing microchips in the U.S and the low cost of producing brooms in Mexico. The cost of producing one broom in U.S is 9 microchips. In Mexico the cost of producing a broom is only 1/9 microchips. If the U.S. produces microchips and imports brooms, and if Mexico produces brooms and imports microchips, both countries will gain from trade because they‟ll each produce the good they can produce more cheaply and import the good that the other country produces more cheaply. Note that the U.S. has an absolute advantage in the production of microchips while Mexico has an absolute advantage in the production of brooms.” In context of International Business and Trade the above example of US and Mexico focuses on absolute advantage. Explain the theory of absolute advantage and comparative advantage and also how nation states are competing to gain advantage over each other.
Assume that Bangladesh can make 100 square yards of textiles (T) OR 20 computer chips (CC) per day, while Taiwanese worker can make 60 square yards of textiles (T) OR 90 computer chips (CC) per day. Assume that: at of 1) in autarky, each country produced at the midpoint of their PPCS uestion 2) each country completely specializes in the appropriate product 3) 40 square yards of T are exchanged for 40 units of CC. What are their gains from trade? Select one: O a. Bangladesh 10 T and 30 CC: Taiwan 10 Tand 5 C. O b. None of the answers offered are correct. O C. Bangladesh 40 T ahd 60 CC Taiwan 50 T and 40 C. O d. Bangladesh 0 T and 30 CC Taiwan 20 Tand 0 C. Oe. Bangladesh 10 T and 10 CC Taiwan 15 Tand 15 C
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A free-trade equilibrium exists in which United States exports Food and imports clothing from China. The goods are produced with two factors: capital and labour. The trade pattern is the one predicted by the H-O theory. Analyse the effects on the terms of trade and on the two countries’ welfare of the following:a. An import tariff on food imposed by China. b. An export subsidy on cloth by China.
Now suppose that if Zimbabwe uses all of its resources, it can produce 50,000 tons of metal ores or 100,000 delivery trucks (trading off at a constant rate). Suppose that if South Africa uses all of its resources, it can produce 20,000 tons of metal ores or 80,000 delivery trucks (trading off at a constant rate). What is the direction of trade (who exports what to whom)? Be sure to give the opportunity costs of production of both goods for both countries. What is one potential price of metal ores in terms of trucks at which both Zimbabwe and South Africa would benefit from trade? Rank the autarkic prices and the world price of metal ores from lowest to highest.

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