1.How do
(b) In what way are they similar?
2.How can we deduce that nations benefit from voluntarily engaging in international trade?
3. Can you think of some ways by which a nation
can gain at the expense of other nations from trade
restrictions?
4.Answer the following questions with reference to
Problem 5.
(a) What is the dollar price of wheat and cloth in
the United Kingdom if the exchange rate between
the pound and the dollar is £1 = $2? Would the
United States be able to export wheat to the United
Kingdom at this exchange rate? Would the United
Kingdom be able to export cloth to the United
States at this exchange rate?
(b) What if the exchange rate between the dollar
and the pound were £1 = $4?
(c) What if the exchange rate were £1 = $1?
(d) What is the range of exchange rates that
will allow the United States to export wheat to
the United Kingdom and the United Kingdom to
export cloth to the United States.
5.(a) sfasfdHow was the Ricardian trade model tested
empirically?
(b) In what way can the results be said to confirm
the Ricardian model?
(c) Why do we then need other trade models?
6. Explain why the small nation of Problem 7
does not specialize completely in the production of
the commodity of its
(b) How does your answer to part (a) differ from
the constant-cost case?
7.What would have happened if the two community
indifference
12. Draw a figure showing the separation of the gains
from exchange from the gains from specialization
for Nation 2 in the right panel of Figure 3.4 if
Nation 2 were now a small nation.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
