Consider two countries, Switzerland and Japan. Suppose both countries have production functions of the form Y = AK¹/3 L²/³. Switzerland has output per worker that is 1.6 times that of Japan and has capital per worker that is 1.4 times that

Consider two countries, Switzerland and Japan. Suppose both countries have production functions of the form Y = AK¹/3 L²/³. Switzerland has output per worker that is 1.6 times that of Japan and has capital per worker that is 1.4 times that

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I've already read the answer provided on this site, but it is not giving me the information I need. I understand the math for finding the opportunity costs for each item in each country. However, where are they getting the answer that 2.5 tons of chemicals is what the US will give up, and 1 ton of apparel is what China will give up? From videos I've seen on youtube, they basically state that as long as the cost is less than what the original opportunity cost is, then nations will trade. So, it costs China 4 apparel for every 1 ton of chemicals, and in the US it costs 1 apparel for every 3 tons of chemicals. Am I right to assume that as long as China can trade less than 4 apparel it will benefit, and as long as the US can trade less than 3 tons of chemicals it will benefit? If so, then what is the math being used to arrive at exactly 1 ton of Chemicals for 1 ton of Apparel for China, and 1 apparel for 2.5 tons of Chemicals for the US? I need to understand the math that is used to…
Suppose Industry X employs $1m worth of capital per employee and Industry Y employs $500,000 worth of capital per employee. Economist say that: 000 Industry X is capital intensive compared to Industry Y Industry Y is capital intensive compared to Industry X Industry Y is inefficient. Industry X is inefficient.
If Q = 0.5 K² L², and we use 2 units of capital and 2 units of labour, how much can we produce? (Only enter the number, no units or symbols.)
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There are 2 countries, D and F. There are 2 products X and Y. Each country has only a single input labor hours, Li i, where į is D for Domestic or F for Foreign and j is either X for Good X use of the labor or Y for Good Y use of labor. In country D: In country F: aD*LD, x Yp = bp*LD, Y XF = ag*LF, x YF = be*LF, Y LF = LF, x + LF, Y Xp = LD = LD, x + LD, Y At.the.moment: ap = 0.25, bp =0.5, LD = 32, aF = 0.8, br = 0.4, LF = 40. Each country is operating in autarky and has determined to divide its labor force equal between the production of X and Y. In Autarky find complete the following tables: 10. 11. In Autarky with labor divided equally between the production of each good, how much of each is produced and consumed. Autarky Production Y F 12. What are the ranges for Terms of Trade? Y< X < Y 13. What are the ranges for Terms of Trade? X< Y <
Consider the Heckscher-Ohlin-Samuelson model for the US producing 2 goods (digital cameras and baskets) using 2 factors (capital and labor). Let the production of digital cameras be relatively capital-intensive. If foreign owners of domestic capital decide to decrease their investment in the US, how would that affect the output in each industry?
true/false explain If an advanced country has an absolute advantage in the production of everything (relative to certain less developed countries), the advanced country will benefit if it eliminates trade with less developed countries and becomes self-sufficient.
Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cars (c) and pharmaceutical drugs (d), and three factors, capital K, skilled labour S, and unskilled labour L. The production functions are given by 1 F.(Ke, Le) = K. Lễ and Fa(Ka, Sa) = K}S}. That is, skilled labour is specific to pharmaceutical drugs, and unskilled labour to cars. Suppose that the countries' factor endowments are KH = 2 = KF, and LF = 3/2, and SH LH :1 || 1 and SF = 1/2, so that the total labour force is 2 in both countries. The price of capital is denoted by r, the price of skilled and unskilled and normalise pa = labour by w, and wi. Denote the goods' prices by pc and Ра, : 1 for simplicity. The demand for cars and drugs in country j = H, F is given by x and r: %3D 2Yi and ra 3 pe 1Yi %3D 3 pa where Y' denotes aggregate income in country j. (a) Draw or compute the PPFS of Home and Foreign.
ackground information: A worker in the United States and a worker in China can each produce 1,000 pairs of jeans per week. A worker in the United States can produce 50 cell phones in a week, and a worker in China can produce 100 cell phones in a week. Answer the following questions based on this information.Part A: If each country attempted to produce both jeans and cell phones, how many jeans and cell phones could each country produce? What would be the total number of jeans and cell phones produced by the two countries combined? (Show your work.)Part B: Calculate the opportunity cost of producing jeans for each country. (Show your work.)Part C: Calculate the opportunity cost of producing cell phones for each country. (Show your work.)Part D: Determine how many jeans should be produced by each nation. (Show your work). Part E: If each nation should specialize in producing jeans and cell phones, explain why; use economic terminology you have learned in this unit in your…
Complete the following paragraph to explain the effect of multinational enterprises on a host nation's economy. Assume a large pharmaceutical company based in Germany, where the corporate tax is 37% decides to relocate some production of pharmaceuticals to Ecuador, where the corporate tax is 8%. If the parent company from Germany purchases pharmaceuticals from its subsidiary in Ecuador at grossly inflated prices, the result is a neutral impact on Ecuador's economy, and a positive impact on Germany's economy. As a result, the regarding the German subsidiary locating in Ecuador. governments of Germany and Ecuador are likely to experience conflict Now, assume that a major national election takes place in Ecuador. As a result, the Indigo party has come to power. Assume that the Indigo party's main political stance is nationalization of all pharmaceutical facilities. Based on this knowledge of the Indigo party's politics, businesses in Germany are likely to support ▼ the election of the…
Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cars (c) and pharmaceutical drugs (d), and three factors, capital K, skilled labour S, and unskilled labour L. The production functions are given by F.(Ke, Le) = K. Lễ and Fa(Ka, Sa) = K}S}. That is, skilled labour is specific to pharmaceutical drugs, and unskilled labour to cars. Suppose that the countries' factor endowments are KH = 2 = KF, L# and LF = 3/2, and SH = 1 and SF = 1 1/2, so that the total labour force is 2 in both countries. The price of capital is denoted by r, the price of skilled and unskilled labour by w, and w. Denote the goods' prices by pc and pd, and normalise pd 1 for simplicity. The demand for cars and drugs in country j = H, F is given by x and r: 1Yi 2Yi and x 3 ре || 3 pi where Y' denotes aggregate income in country j. (c) Compute the autarky equilibrium in Foreign and show that p > p. Compare equilibrium prices in Home and in Foreign and explain.