MicroEconomics (about winners and losers from free trade) Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $33. Suppose that the world price for a meeker is $25. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. 1. If Meekertown allows free trade, it will be 1. Export 2. Import meeker. 1. Meekertownian consumers are worse off under free trade than they were before. 1. True 2. False 2. Meekertownian producers are better off under free trade than they were before. 1. True 2. False 3. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. 1. True

MicroEconomics (about winners and losers from free trade) Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $33. Suppose that the world price for a meeker is $25. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. 1. If Meekertown allows free trade, it will be 1. Export 2. Import meeker. 1. Meekertownian consumers are worse off under free trade than they were before. 1. True 2. False 2. Meekertownian producers are better off under free trade than they were before. 1. True 2. False 3. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. 1. True

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

LENTILS (Millions of pounds) 80 70 8 60 50 40 30 20 10 + 0 0 PPF 10 Shenandoah 20 30 40 50 60 PEAS (Millions of pounds) 70 80 (?) LENTILS (Millions of pounds) 80 70 60 50 40 30 PPF 20 10 0 0 T 10 Denali 40 20 30 50 60 PEAS (Millions of pounds) 70 80 (?) Shenandoah has a comparative advantage in the production of , while Denali has a comparative advantage in the production of . Suppose that Shenandoah and Denali specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of peas. million pounds of lentils and million pounds of Suppose that Shenandoah and Denali agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pounds of peas for 20 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Denali. The following graph shows the same PPF for Shenandoah…
Labor Hours per Output Good X Labor Hours Per Output Country A Good Y 30 neither good; Good Y Both goods; Good X neither good; Good X can't be determined 1.6 Country B 20 1.2 Refer to Table 3.1 above. Country A has an absolute advantage in the production of and Country B has an comparative advantage in the production of
Please fill in the boxes below, and verify the top is right
Food (Comparative Advantage) The consumption possibilities frontiers shown by the blue lines in the following exhibit assume terms of trade of 1 unit of clothing for 1 unit of food. What would the consumption possibilities frontiers look like if the terms of trade were 1 unit of clothing for 2 units of food? Production (and Consumption) Possibility Frontiers with Trade (Millions of Units Per Day) (a) United States (b) Izodia 600 500- 400 600 500 U 400 300 200 U 100 Food 300 200 100 13 0 100 200 300 400 Clothing 0 100 200 300 400 Clothing
Suppose there are three countries in the world: Portlandia, Sanaton, and Volcania. These three countries produce a total of 3 different kinds of goods: Raspberries, Pomegranates, and Grapefruits. If Portlandia imposes some protectionist measures on Raspberries from Sanaton, and Volcania. OThe price of Raspberries in Portlandia will increase for everyone OThe Raspberries industry in Volcania will benefit OThe Raspberries in Sanaton will be the only one to see higher prices for this product
The countries of Nickeltown and Lykesville each produce two goods: Ovens and Dishwashers. The table below lists the production for each good, for each country per year when each country uses half of their resources to produce each good. Country Production of Ovens Production of Dishwashers Nickeltown 105 Lykesville 147 What is the opportunity cost of producing 1 Ovens in Nickeltown Dishwashers 70 42 What is the opportunity cost of producing 1 Ovens in Lykesville Dishwashers ONickeltown OLykesville ONot enough information Which country has a comparative advantage in producing Ovens?
Problem 2: Comparative Advantage and Gains from Trade Suppose that Dennis and Janice are roommates. If Dennis puts all his effort into doing laundry, he can wash 20 loads per week. if he puts all his effort into cooking meals, he can produce 30 meals. If Janice puts all her effort into doing laundry, she can wash 20 loads per week. If she puts all her effort into cooking meals, she can produce 20 meals. a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household.…
According to the resource-based view, there are economic gains from international trade because some firms in one nation generate exports that are valuable, unique, and hard to imitate that firms from other nations find it beneficial to import. O True O False
Consider two countries Home and Foreign producing goods using only one factor of production, Labor. These are the marginal products of labor. Home has 100 people and foreign has 50 people. Home: Wheat 4 bushels Cloths 2 yards Foreign: Wheat 1 bushel Cloths 1 yard Assuming there is no trade, draw production possibility frontiers of two countries. With no trade, what are the relative prices of wheat and cloths in two countries? What will happen when they begin to trade?
(h) Suppose you conduct an opinion poll among individuals at Home, in which you ask them whether they have benefitted from international trade. What do you predict the response would be? Is this consistent with the empirical evidence we observe about people’s support for free trade in reality?
4.
Morocco and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In Morocco it takes two hours for each worker to harvest green beans and two hours to harvest a tomato. Tunisian workers need only one hour to harvest the tomatoes but four hours to harvest green beans. Assume there are only two workers, one in each country, and each works 40 hours a week. a. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. b. Identify which country has comparative advantage in which product. c. Initially each country used ½ of the workers in producing green beans and tomatoes. If each country specializes based on comparative advantage find an exchange mechanism so that both gain from trade.