Cashews(pounds)150Pakistan240 Cotton(bolts)Cashews(pounds)120Indonesia320 Cotton(bolts)The figure above shows the production possibilities frontiers for Pakistan andIndonesia. Each country produces two goods, cotton and cashews.If the two countries have the same amount of resources and the same technologicalknowledge, which country has an absolute advantage in the production of cotton? The figure above shows the production possibilities frontiers for Pakistan andIndonesia. Each country produces two goods, cotton and cashews.If the two countries have the same amount of resources and the same technologicalknowledge, which country has an absolute advantage in the production of cotton?They have the same advantage.Indonesia.cannot be determined.Pakistan.

Cashews (pounds) 150 Pakistan 240 Cotton (bolts) Cashews (pounds) 120 Indonesia 320 Cotton (bolts) The figure above shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?

Cashews (pounds) 150 Pakistan 240 Cotton (bolts) Cashews (pounds) 120 Indonesia 320 Cotton (bolts) The figure above shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter18: Trading With Other Nations

Section: Chapter Questions

Problem 10AA

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2
Consider two countries, Spain and Russia and two goods, wine and vodka. Labour is the only factor of production. The per unit labour requirements for wine is 2 in Spain and 5 in Russia. Meanwhile the per unit labour requirements for vodka is 2 in each of the two countries. The wages in Spain are 50 % higher than the wages in Russia. What is the cost of producing wine in Spain relative to the cost of producing wine in Russia? What is the cost of producing vodka in Spain relative to the cost of producing vodka in Russia? In the absence of transport costs will there be trade? If yes, then who will specializein what? Illustrate your answer numerically. Now introduce transport costs: Exporting wine and vodka abroad increases the initial cost by 100 %. What happens to the trade between Spain and Russia? Illustrate your answer numerically.
“In 2019, I started my small business by selling prints of my photographs. Now it’s temporarily closed. During this time I had the option of shipping my prints through USPS or UPS. I decided to ship my prints through USPS instead of UPS since it was a bit expensive at the time. My prints that were shipped out from USPS arrived in time and came in good condition.” What is the opportunity cost?
In Lima one worker can produce either 21 bushels of corn of 5 pounds of tomatoes in one day. In Puma one worker can produce either 54 bushels of corn or 7 pounds of tomatoes in one day. The country that specializes in tomato production is willing to sell one pound of tomatoes for at least how many bushels of corn?
Consider an economy with two producers, Sidney and Connor. Each allocates 8 hours per day between the production of chocolate and bananas. Given 8 hours of labour, Sidney can produce 80kg of chocolate or 16kg of bananas. Connor can produce either 2kg of chocolate or 4kg of bananas per hour. B) Introducing Trade i) Suppose production capacity does not change. Do we expect there to be trade between Sidney and Connor? Why or why not? ii) What are the bounds on the price of bananas (in terms of chocolate) if there is trade? In other words, what range must the price of bananas fall within? iii) Assume a price of 4. In other words, 1kg of bananas cost 4kg of chocolate. Explain why trade is likely to make both Sidney and Connor better off in this case.
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Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy. You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI). You are given a brief about Ghana highlighting the following points: About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food. The majority of Ghana's people live in rural areas and exist on a subsistence way of life. Ghana has one of the highest rates of income inequality in the world. Nearly half of the population is employed in agriculture. After a meeting with Ghana’s president you learn that the government is also interested in repatriating migrants that went to European countries to study engineering a decade ago. Explain how this is likely to change Ghana’s comparative advantage
Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy. You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI). You are given a brief about Ghana highlighting the following points: About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food. The majority of Ghana's people live in rural areas and exist on a subsistence way of life. Ghana has one of the highest rates of income inequality in the world. Nearly half of the population is employed in agriculture. Ghana imports and exports food from and to neighbouring Côte d'Ivoire. The latter nation is very similar to Ghana in most ways. Can you explain what may drive two very similar nations to trade?
Assuming that there are only two countries in the world, Indonesia and ROW (Rest of the World) which both produce Cloth (C) and Food (F) using labor as factor production. The following table shows the number of hours of work needed to produce one unit of C and F in both countries: Cloth (C) Food (F) Indonesia 1 hour per meter 2 hour per kg ROW 6 hour per meter 3 hour per kg
A country (Country X) that only produces two goods (good A) and (good B) in a closed market with another country (Country Y) that only produces the same two goods. Country X has 1000 workers and Country Y has 4000 and no workers can migrate. It takes Country X 2 workers to produce good A and 3 workers to produce good B whereas it takes Country Y 3 workers to produce good A and 1 worker to produce good B. Labour is the only factor of production and both follow a standard Ricardian model that has an identical utility function. Country X decides to adopt an import substitution strategy to improve the efficiency of productivity of good B. Explain what this means and provide an opinion on this strategy?