Explain briefly but clearly if the following statement is true, false or uncertain: The common equilibrium relative price of the two goods after trade can not lie outside the range bonded by the autarky (before trade) price ratios in the two countries
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Explain briefly but clearly if the following statement is true, false or uncertain: The common
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- The following hypothetical production possibilities tables for China and Canada. Assume that, before specialization and trade, the optimal product mix for China is alternative D and for Canada is alternative S.Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of meekers is $30. Suppose that the world price of meekers is $40. Assume that Meekertown is too small to influence the world price of meekers once it enters the international market. If Meekertown allows free trade, then it will meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. Statement True False Meekertownian consumers are worse off under free trade than they were before. Meekertownian producers were better off without free trade than they are with it. True or False: When a country is too small to affect the world price, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. O True False3. Be sure to label all points. Suppose the domestic autarky relative price M/S=1 and autarky consumption takes place at point A with (M/S) (75, 100). Production with free trade takes place at point B with (M, S) = (100, 70). Does the country specialize in the production of M or S? The country exports 15 units of M and 45 units of S are imported. Find the consumption bundle (M, S) and label it point C. Sketch the trade triangle. What are the terms of trade? Evaluate the gains from trade in terms of M for this economy. M 2
- Consider two countries, Home and Foreign. In the figure below, the import demand ("IDHome") curve depicts Home's demand for Foreign's flash drives, and the import supply curve ("ISForeign") depicts Foreign's supply of flash drives to Home. Assume Home is a "large" country that levies a tariff against Foreign imports of flash drives, thereby shifting the relevant supply curve from ISForeign to ISForeign +t. For the following questions, please refer to the figure below. P $30 28 26 24 22 20 18 16 15-- 14 12 10 8 6 4 2 0 2 4 ISForeign +t 6 8 10 12 14 16 18 20 22 22 24 26 28 ISForeign IDHome 30 Q With free trade, Home's consumer surplus equals $112.50 and Foreign's producer surplus equals $112.50. With a tariff of $ 12 per flash drive, Home's consumer surplus equals $72, Foreign's producer surplus equals $ 36, Home's tariff revenue equals $72, and Home's deadweight loss equals $45. Of the Home's tariff revenue, $36 comes from Foreign's producers, and the rest comes from Home's consumers.…Which of the following best explains the concept of "Comparative Advantage" in international trade? a) A country should produce goods in which it has an absolute advantage and trade for those where it does not. b) A country should only export goods and import nothing to maintain a positive trade balance. c) A country should specialize in the production of goods for which it has the lowest opportunity cost compared to other countries. d) A country should diversify its production across various sectors to avoid dependence on a single export commodity.Consider the domestic steel market. Under autarky, the domestic equilibrium is such that 8 million pounds of steel are produced and sold at a price of $12 per pound. International producers, generally, are able to produce at a lower cost than domestic producers. Under an open trade policy, the world price of $6 enters the domestic market as an exogenous variable. For the questions below, assume that the domestic market is beginning in the equilibrium that exists under an open trade policy and consider the impact of a $3 per pound tariff on imported steel. What is the gain in producer surplus from the tariff? $ million. (round your answer to two decimal palces) What import quota, Q, would produce the same gain in producer surplus as the tariff? Q million pounds (enter your response as a whole number). million. (round your What is the deadweight loss using a quota? $ answer to two decimal places and enter it as a positive number) Price/pound 30- 27- 24- 21- 18- 15- 12- 9- 6- 3- 0+ 0 B F…
- Suppose Jordan is open to free trade in the world market for oranges. Because of Jordan's small size, the demand for and supply of oranges in Jordan do not affect the world price. The following graph shows the domestic oranges market in Jordan. The world price of oranges is Pw = $800 per ton. Throughout this problem, assume that changes in trade policies in other nations do not significantly affect the world market for oranges and that there are no transportation or transaction costs associated with international trade in oranges. Also assume that domestic supplies will satisfy domestic demand as much as possible before any exporting or importing takes place. 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 domestic producer surplus (PS). PRICE (Dollars per ton) 1280 1220 1160 1100 1040…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.Consider the case of the following large country (all prices are measured in euros, and quantities are measured in single units): – Domestic demand curve: P = 3600 –3Q– Domestic supply curve: P = 2Q– World free trade price of imports = 140 euros per unit– When the tariff is introduced, domestic prices rise by exactly one third of the amount of the tariff. Calculate the following. Give any decimal answers to 1 decimal place. Put your answers in the spaces provided. Also show your workouts so as I know how you arrived to your answers.Draw a diagram depicting the importing country market under free trade and with a tariff. 3Under free trade equilibrium:The quantity consumed domestically: ___________________________________________________The quantity produced domestically: ___________________________________________________The quantity imported: _ This homework is really confusing to me, especially when im tring to draw the diagrams
- Assume that demand and supply of a good in country 1 and country 2 are given by the following expressions (prices are measured in euros and quantities in numbers per day): Q1120P(demand in country 1) Q1 P-20 (the supply in country 1) Q2=60-2P (demand in country 2) Q2-P-15 (the supply in country 2) 4 4a 4b Calculate each country's price under autarky. Derive the export supply and import demand for the good and illustrate them together inAssume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula = 5 cans tuna fish Tunata: 1 can baby formula = 7 cans tuna fish a. In what product should each nation specialize? Canswicki should produce baby formula and Tunata should produce tuna fish b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 4 cans tuna fish: (Click to select) v iI. 1 can baby formula = 8 cans tuna fish: (Click to select) v es iII. 1 can baby formula = 5.5 cans tuna fish: (Click to select)i live in turkey a) What are the comparative advantages (as a product or service) of your country? Why? b)Are those products main export goods/services of your country? i) If yes, please give the percent of export share of those products. ii) If no, please indicate which products/services should beconsidered as products that they have comparative advantage considering the current export volume?
