Trade Leads to a Convergence of Relative Prices Without trade: Home equilibrium relative price is equilibrium relative price is _______ • Trade leads to convergence of relative prices. & Foreign Like the Ricardian model, the Heckscher-Ohlin model predicts a convergence of relative prices with trade. Relative price of cloth PP (PJPA) (POP) (POP) . With trade, the relative price of cloth rises in the relatively labor abundant (home) country and falls in the relatively labor scarce (foreign) country. RD Home RS Relative quantity of cloth, QO,

Trade Leads to a Convergence of Relative Prices Without trade: Home equilibrium relative price is equilibrium relative price is _______ • Trade leads to convergence of relative prices. & Foreign Like the Ricardian model, the Heckscher-Ohlin model predicts a convergence of relative prices with trade. Relative price of cloth PP (PJPA) (POP) (POP) . With trade, the relative price of cloth rises in the relatively labor abundant (home) country and falls in the relatively labor scarce (foreign) country. RD Home RS Relative quantity of cloth, QO,

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 a non-oil-exporting economy in its long-run equilibrium. Which of the following explains the ultimate long-run effect of a decrease in international oil price on the GDP of this economy? The GDP will ultimately increase. O The GDP will ultimately decrease. The GDP will ultimately be at potential output, in the absence of downward- sticky wages. The effect on GDP will be ambiguous.
The extent to which a national economy is involved in global trade: is not very strongly related to the issue of whether the economy has a substantial trade imbalance. O is not very strongly related to the underlying economic meaning of trade imbalances. is not very strongly related to either a or b above. is very strongly related to both a and b above.
Consider the aggregate economy represented by the graph below. Assume the economy is initially in equilibrium at point A. How would the equilibrium price and quantity change if changes in currency exchange rates make exports cheaper? Price level (GDP deflator. 2009-100) P₁ LRAS₁ GDP SRAS₁ Real GDP (trillions of 2009 dollars) AD₁ The equilibrium price would rise and the equilibrium quantity would fall. The equilibrium price and quantity would remain unchanged. The equilibrium price and quantity would rise. The equilibrium price and quantity would fall.
Suppose there is trade between Spain and France Suppose that each produce only two goods, and that they each have $140,000 of resources to spend on the production of these goods. France• France produces one unit of oil at a cost of $5 per unit. • France can produce one unit of beef at a cost of $17 per unit. Spain• Spain produces one unit of oil at a cost of $11 per unit. • Spain produces one unit of beef at a cost of $21 per unit. a)Which country has the comparative advantage in producing oil? Which has the comparative advantage in producing beef? b)Draw the Production Possibilities Frontier (PPF) for Spain under autarky. Draw this PPF with oil on the x-axis and beef on the y-axis. Label both the x-intercept and y-intercept Suppose now that Spain and France start trading with each other at a rate of 3 units of oil for 1 unit of beef. C) Draw the Production Possibilities Frontier (PPF) for Spain under this trade agreement. D) Draw this PPF with oil on the x-axis and beef on the…
As you did for Freedonia, use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Desonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Desonia's consumption after specialization and trade. ? SUGAR (Millions of pounds) 32 28 24 20 16 N 00 4 0 PPF True 4 False 8 Desonia 20 12 16 GRAIN (Millions of pounds) 24 28 32 TPL True or False: Without engaging in international trade, Freedonia and Desonia would not have been able to consume at the after-trade consumption bundles. (Hint: Base your answer to this question on the answers you previously entered on this page.) + Consumption After Trade
Please answer for this question for option 4 to 7. All the necessary information is given in the images below.
Please help with the two questions