At the start of this unit, we discussed the decision by many clothing companies tooutsource production to Bangladesh and other low-wage economies. Show your results ina single diagram.1. Draw the best response curve of the workers in the high-wage home country in theabsence of outsourcing (with the wage on the horizontal axis, and effort on the verticalaxis).2. In the same diagram show the best response curve of workers in the foreign low-wagecountry in the absence of outsourcing. (Assume that wages are measured in dollars inboth cases.)3. Show in your diagram what the home country employer will pay home country workersif outsourcing is not possible.4. Show in your diagram what the home country employer will pay workers in the low-wage country if it switches production there (ignore the costs of moving production).5. Now assume that outsourcing is possible and is widely practiced by many firms in theclothing industry. Show the best response function for home country workers underthese conditions. Explain why this is different from your answer to 1. Show theseoutcomes in a diagram.

Unemployment is a term alluding to people who are employable and effectively looking for a job yet…

tsource production to Bangladesh and other low-wage economies. Show your results in single diagram. Draw the best response curve of the workers in the high-wage home country in the absence of outsourcing (with the wage on the horizontal axis, and effort on the vertical axis). In the same diagram show the best response curve of workers in the foreign low-wage country in the absence of outsourcing. (Assume that wages are measured in dollars in both cases.) Show in your diagram what the home country employer will pay home country workers if outsourcing is not possible. Show in your diagram what the home country employer will pay workers in the low- wage country if it switches production there (ignore the costs of moving production). Now assume that outsourcing is possible and is widely practiced by many firms in the

tsource production to Bangladesh and other low-wage economies. Show your results in single diagram. Draw the best response curve of the workers in the high-wage home country in the absence of outsourcing (with the wage on the horizontal axis, and effort on the vertical axis). In the same diagram show the best response curve of workers in the foreign low-wage country in the absence of outsourcing. (Assume that wages are measured in dollars in both cases.) Show in your diagram what the home country employer will pay home country workers if outsourcing is not possible. Show in your diagram what the home country employer will pay workers in the low- wage country if it switches production there (ignore the costs of moving production). Now assume that outsourcing is possible and is widely practiced by many firms in the

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

If countries engaged in trade enjoy welfare gains, why is there often some opposition to free trade?
Discuss scale economies as they apply to trade.
70,000 Norway 60,000 United States 50,000 Netherlands Denmark • Germany France 40,000 UK Japan. Italy South Korea Spain 30,000- Greece Russla 20,000 Mexico Chile Turkey 10,000- 6,400 6,500 6,600 6,700 6,800 6,900 7,000 7,100 7,200 7,300 7,400 7,500 Average annual hours of free time per worker According to the graph: Select one or more: a. UK workers have more free time than Greek workers. Ob. UK workers have lower GDP per capita than Spanish workers. O c. The relationship between GDP per capita and free time is downward sloping. O d. US workers work longer hours than French workers. GDP per capita (USD PPPS)
If the capital/labor ratio in import-competing industries in country A is $8,000 per worker and the capital/labor ratio in A 's export industries is $4,000 per worker, then country A's "Leontief statistic" is a. 0.50 b. 0.67 c. 1.00 d 2.00
Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cars (c) and pharmaceutical drugs (d), and three factors, capital K, skilled labour S, and unskilled labour L. The production functions are given by 1 F.(Ke, Le) = K. Lễ and Fa(Ka, Sa) = K}S}. That is, skilled labour is specific to pharmaceutical drugs, and unskilled labour to cars. Suppose that the countries' factor endowments are KH = 2 = KF, and LF = 3/2, and SH LH :1 || 1 and SF = 1/2, so that the total labour force is 2 in both countries. The price of capital is denoted by r, the price of skilled and unskilled and normalise pa = labour by w, and wi. Denote the goods' prices by pc and Ра, : 1 for simplicity. The demand for cars and drugs in country j = H, F is given by x and r: %3D 2Yi and ra 3 pe 1Yi %3D 3 pa where Y' denotes aggregate income in country j. (a) Draw or compute the PPFS of Home and Foreign.
Which of the following was a positive side-effect of Latin America’s import substitution industrialization policies? Select one: a. the growth of transportation and infrastructure facilities b. Balanced fiscal budgets for Latin American governments c. Lower prices of industrial goods for Latin American citizens d. Declining food supplies and agroexport production
In Ecuador, cut roses are one of the country’s leading exports. Prior to advancements in the air transportation industry, this would have been impossible as roses must be sold within three to five days once cut. Today Ecuador is one of the world’s top producers of roses. What are the various trade theories that help explain ecuador’s competitive position in exporting roses? Then consider how well the Ecuadorian rose industry has balanced exporting success with socially responsible business practices.
South Korea's comparative advantage in cellular technology can be attributed to: a. climate. b. factor endowments. c. technology. d. exchange rates.
In the specific factor model with labour as a mobile factor, introducing trade lowers the welfare of workers increases output and consumption in the world. increases the welfare of all the owners of specific factors in Home. induces a Pareto improvement for the economy that exports more.
Indian exports of computer software have grown rapidly since the early 2000s. In the early 2000s, the cost to employ programmers in India was about half the cost of programmers with comparable skills in the United States. In 2013 the cost in India was about two-thirds the cost in the United States. What trade theory or theories help us to understand the change?
Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cars (c) and pharmaceutical drugs (d), and three factors, capital K, skilled labour S, and unskilled labour L. The production functions are given by F.(Ke, Le) = K. Lễ and Fa(Ka, Sa) = K}S}. That is, skilled labour is specific to pharmaceutical drugs, and unskilled labour to cars. Suppose that the countries' factor endowments are KH = 2 = KF, L# and LF = 3/2, and SH = 1 and SF = 1 1/2, so that the total labour force is 2 in both countries. The price of capital is denoted by r, the price of skilled and unskilled labour by w, and w. Denote the goods' prices by pc and pd, and normalise pd 1 for simplicity. The demand for cars and drugs in country j = H, F is given by x and r: 1Yi 2Yi and x 3 ре || 3 pi where Y' denotes aggregate income in country j. (c) Compute the autarky equilibrium in Foreign and show that p > p. Compare equilibrium prices in Home and in Foreign and explain.
(A) what percentage of this total was produced by the three largest economies shown in this bar graph? (b)what percentage of this total was produced by the three smallest economies shown in this bar?