Answered: gain from trade

Business

Economics

gain from trade

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the combined production possibility frontier for a two good (fish and apples), two-person (Dianne and Rachel) economy shown in the graph above. It is known that Dianne has a comparative advantage in fish production. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning. Dianne has an absolute advantage in both fish and apple production. The marginal cost of fish production for Dianne is 1 apple. The marginal cost of apple production for Rachel is 2 fish.
The United States and Canada have the production possibilities curves shown above. It is determined that the United States has the comparative advantage in peanuts. Will both nations gain from trade if the terms of trade that are offered are 1 Peanut= 3 Corn? Why or why not? Show your work.
Determine the equilibrium price of good x (setting the price of good x as 1) that prevails at Home and Foreign under autarky – that is, when they do not trade with each other. Explain why any other price could not be the equilibrium price in autarky.
A small island nation of Gondwana can produce either 40 Apple iPhones (Apple for short) or 80 Samsung Galaxy phones (Samsung for short) every hour. A small island nation of Pandea can produce 75 Apple or 100 Samsung phones every hour. Without trade, each island nation consumes everything it produces. Assume that labor is the only resource they need on each island. If they decide to trade, transportation cost is zero. After 10 hours of work right now, Gondwana produces 200 Apple and 400 Samsung phones, Pandea produces 375 Apple and 500 Samsung phones. (a) Who if any has a comparative advantage in Apple iPhones? Who if any has a comparative advantage in Samsung Galaxy phones? (b) Is it possible for both Gondwana and Pandea to improve their consumption levels in one or both products, without decreasing consumption in any of the products? If no, explain why; if yes, give an example of production schedule and trade flows that would be mutually beneficial. (c) Give a range of prices of…
Nation 1: Mexico Good 1: televisions Nations Given: Mexico and Canada produce only two goods. They have the same fixed resources are equally efficient and both countries have constant opportunity costs between the two goods. in one month Mexico can produce 250,000 televisions or 70,000 washing machines Canada can produce 120,000 televisions or 50,000 washing machines. Fill in the table below. + Mexico Canada I Max Production Nation 2: Canada A) Graph the given information. Good 2: Washing machines Opportunity Cost Opportunity Cost
Rafael's PPF Naomi's PPF 30 30 25 25 20 20 A 15 15 10 10 A 5 10 15 20 25 30 10 15 20 25 Rackets Rackets Refer to the diagrams above. Suppose that before trading, Rafael and Naomi had been producing at point A on their respective PPF. Then suppose they choose to specialize and trade. After specializing they trade 8 Rackets for 8 Balls. After this trade, Rafael will consume and Select one: а. 20 Rackets; 8 Balls b. 8 Rackets; 8 Balls C. 8 Rackets; 12 Balls d. 12 Rackets; 8 Balls Balls Balls 30
Since Russia invaded Ukraine last year many sanctions have been imposed on Russia. Suppose the sanctions involve a ban on all trade with Russia. In purely economic terms, what are the effects of such a ban? Who wins? Who loses?.
What is the opportunity cost of one cake if we move from combination A to combination B?
Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. United States Mexico Hamburgers (in tons) Tacos (in tons) Hamburgers (in tons) Tacos (in tons) 162 135 90 108 18 90 180 54 36 45 270 54 Which country has an absolute advantage in producing tacos? The United States Which country has a comparative advantage in producing tacos? Mexico Suppose the United States is currently producing 180 tons of hamburgers and 54 tons of tacos and Mexico is currently producing 36 tons of hamburgers and 45 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which each has a comparative advantage), then a total of additional ton(s) of hamburgers can be produced for the two countries combined (enter a numeric response using an integer)
Two neighboring island nations, Seychelles and Mauritius, produce iPad's, coffee, or a combination of both. Suppose that they each have 4 million labor hours available per week for production. The following table gives the amount of each product that can be produced using one hour of labor: Country Mauritius Seychelles Mauritius' opportunity cost of produing 1 iPad is iPads (per hour of labor) 12 of coffee. Therefore, 8 Initially, suppose Mauritius uses 1 million hours per week to produce iPads and 3 million hours per week to produce coffee, while Seycheles uses 3 million hours of labor per week to produce iPads and 1 million hours per week to produce coffee. Consequently, Mauritius produces 12 million iPads and 72 million pounds of coffee, and Seychelles produces 24 million iPads and 32 million pounds of coffee. Assume there are no other countries willing to trade with them. So, if Mauritius and Seychelles don't trade with each other, they can only consume what they can produce using…
Why is it important that the country or region with the lower opportunity cost produce the good? How would you use the concept of comparative advantage to argue for reducing restrictions on trade between countries?
Suppose there exist two imaginary countries, Sequoia and Denall. Their labor forces are each capable of supplying four million hours per week that can be used to produce almonds, shorts, or some combination of the two. The following table shows the amount of almonds or shorts that can be produced by one hour of labor. Almonds Country (Pounds per hour of labor) Sequoia Denall Suppose that initially Denall uses 1 million hours of labor per week to produce almonds and 3 million hours per week to produce shorts, while Sequoia uses 3 million hours of labor per week to produce almonds and 1 million hours per week to produce shorts. As a result, Sequola produces 12 million pounds of almonds and 16 million pairs of shorts, and Denall produces 6 million pounds of almonds and 36 million pairs of shorts. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of almonds and shorts it produces.…