Suppose that without trade the workers in each country spend half their time producing each good.Use the black point (plus symbol) to indicate this production and consumption point for the United States, and use the grey point (star symbol) toindicate this production and consumption point for China.If these countries were open to trade,The price of a computer can be expressed in terms of shirts. The highest price for which a computer can be traded that would make both countriesshirts per computer, and the lowest price that makes both countries better off isshirts per computer.better off isTrue or False: There are no longer gains from trade.Suppose that China catches up with American productivity so that a Chinese worker can produce 60 shirts or 30 computers.#O Truewould export shirts andO FalseSearch the web and WindowsÔwould benefit from trade.eGrade It NowSave & ContinueContinue without savingM 8. Problems and Applications Q8Suppose that in a year an American worker can produce 60 shirts or 30 computers and a Chinese worker can produce 60 shirts or 12 computers.There are 1 million workers in each country.Use the blue line (circle symbol) to graph the production possibilities frontier (PPF) for the United States, and use the green line (triangle symbol) tograph the production possibilities frontier for China.Quantity of Computers (Millions)3027242118151296300 10 203040 50 60 70 80 90 100Quantity of Shirts (Millions)U.S. PPFChina PPFUS without Trade✪China without TradeSuppose that without trade the workers in each country spend half their time producing each good.

The value of alternative opportunities foregone and sacrificed to acquire one unit of a commodity is…

Suppose that without trade the workers in each country spend half their time producing each good. Use the black point (plus symbol) to indicate this production and consumption point for the United States, and use the grey point (star symbol) to indicate this production and consumption point for China. If these countries were open to trade, The price of a computer can be expressed in terms of shirts. The highest price for which a computer can be traded that would make both countries better off is ✓shirts per computer, and the lowest price that makes both countries better off is shirts per computer. True or False: There are no longer gains from trade. would export shirts and Suppose that China catches up with American productivity so that a Chinese worker can produce 60 shirts or 30 computers. True would benefit from trade. O False

Suppose that without trade the workers in each country spend half their time producing each good. Use the black point (plus symbol) to indicate this production and consumption point for the United States, and use the grey point (star symbol) to indicate this production and consumption point for China. If these countries were open to trade, The price of a computer can be expressed in terms of shirts. The highest price for which a computer can be traded that would make both countries better off is ✓shirts per computer, and the lowest price that makes both countries better off is shirts per computer. True or False: There are no longer gains from trade. would export shirts and Suppose that China catches up with American productivity so that a Chinese worker can produce 60 shirts or 30 computers. True would benefit from trade. O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Finally, Canada and Australia are both English-speaking countries with not-too dissimilar population sizes. However, Canada’s trade is twice as large as that of Australia’s. to what extent, does comparative advantage help explain this?
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.
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…
Suppose Colombia is open to free trade in the world market for soybeans. Because of Colombia’s small size, the demand for and supply of soybeans in Colombia do not affect the world price. The following graph shows the domestic soybeans market in Colombia. The world price of soybeans is PW=$400 per ton.
As you may have heard, Russia decided to invade its neighbor, which has led to international condemnation (albeit not on all fronts). The EU, a former major importer of gas from Russai, went ahead with sanctions. Imagine, if you will, that the respective heads of state get together and try to negotiate a trade agreement to end sanctions. They each have three possible choices: (a) Maintain tariffs against the other nation (T); (b) Seek mediation from the WTO, which would implement an international trade agreement at a small cost (M); (c) Unilaterally remove tariffs (F). The payoff matrix is as given below. Is there a dominant strategy for either player? Find all the (pure strategy) Nash equilibria in the game. How would this change if, instead, the mediation is costless and yields a payoff of 50 to each nation (assuming mutually successful mediation) and a payoff of 0 (if the other nation chooses otherwise)? **
It has been shown that the US has a comparative advantage in capital-intensive goods while China has a comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct? a) The US has the stronger bargaining power in the determination of the relative price after trade. b) In the US, the employers are better off while the workers are worse off as a result of trade. c) Specialization means that China will produce all the capital-intensive goods. d) China has the stronger bargaining power in the determination of the relative price after trade.
Argentina and Brazil are considering the potential gains of trade. There is only one factor of production: labor. There are only two goods being produced in either economy: coffee and wine. Argentina can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 2 hours of labor, and producing 1 bottle of wine requires 4 hours of labor, in Argentina. Similarly, Brazil can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 1 hour of labor, and producing 1 bottle of wine requires 5 hours of labor, in Brazil. A). Which country has an absolute advantage in the production of coffee? B). Which country has an absolute advantage in the production of wine? C). Draw the Production Possibilities Frontier for the two countries.
Create a diagram similar to Figure 1.4 in which demand in both countries is identical and trade arises because of differences in supply. Do another diagram in which supply is identical across nations but differences in demand lead to trade.
When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce lemons and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. (? (?) Maldonia Lamponia 64 64 56 56 48 PPF 48 40 40 32 32 24 24 PPF 16 16 16 24 32 40 48 56 64 16 24 32 40 48 56 64 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of production of while Lamponia has a comparative advantage in the . Suppose that Maldonia and Lamponia specialize in the production of the goods in which each has a comparative advantage.…