The figure above represents the market for gadgets in Country H, a small country. Assume that there is free trade with the rest of the world (ROW). A gadget sells for $17 in the ROW, and it costs $2 to ship a gadget between Country H and the ROW. a. b. What is the price of a gadget in Country H? How many gadgets are produced? How many gadgets are consumed? What is Country H's net gain or loss from trade? Give a $ value.

The figure above represents the market for gadgets in Country H, a small country. Assume that there is free trade with the rest of the world (ROW). A gadget sells for $17 in the ROW, and it costs $2 to ship a gadget between Country H and the ROW. a. b. What is the price of a gadget in Country H? How many gadgets are produced? How many gadgets are consumed? What is Country H's net gain or loss from trade? Give a $ value.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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BASIL (Millions of pounds) The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A. As you did for Yosemite, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade. 64 56 48 PPF 40 32 24 16 8 0 8 16 Rainier 24 32 40 48 56 64 ALMONDS (Millions of pounds) Consumption After Trade ? True or False: Without engaging in international trade, Yosemite and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) ○ True False
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.
Use the following table for Country X to answer the next question. Column 1 of the table is the world-market price of a product, Column 2 is the quantity demanded domestically (Qdd), and Column 3 is the quantity supplied domestically (Qsd). Assume the small-country model is applicable. Price Qdd Qsd $5.00 200 400 4.00 250 350 300 250 200 3.00 300 2.00 350 1.00 400 If Country X opens itself up to international trade and the world-market price of the product is $3, then Country X will Multiple Choice O neither export nor import the product. export some units of the product. import some units of the product. not produce the product.
Refer to the graph for the following questions. 1. Which country has the absolute advantage in production of Good A? A. Country Y B. Neither Country has an absolute advantage of producing Good A. C. Country X 2. Which Country has the comparative advantage in production of Good A? A. Neither Country has a comparative advantage in producing Good A. B. Country X C. Country Y 3. Which Country has the com advantage in production of Good B? A. Country X B. Country Y C. Neither country has a comparative advantage in producing Good B.
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A friend tells you the following: “Free trade sounds good, but a country like Honduras doesn’t have any comparative advantage compared to the United States. Therefore, trade with us will exploit them and make their economic situation worse.” Explain to your friend the error in his thinking.