Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 18, Problem 8CQ
(a)
To determine
The purchase of Country A’s products instead of imported products and the economic impact.
(b)
To determine
The purchase of domestic products instead of imported economic impact in State C .
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help me
There are two countries Home and Foreign.
Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit
labor requirement in apple production is 3, while in banana production it is 2.
Foreign has a labor force of 800, Foreign's unit labor requirement in apple production is 5, while in
banana production it is 1.
Suppose world relative demand takes the following form. Demand for apples/demand for
bananas price of bananas/price of apples
1.) Using the 3-point curved line drawing tool, draw the relative demand curve on the graph to the
night. Label the curve RD.
Now suppose that instead of 1.200 workers, Home had 2,400. The relative supply curve (RS)
would shift to the right (as shown by RS,)
2) Using the point drawing tool, indicate the new equilibrium relative price of apples, Label this
point EQ.
Carefully follow the instructions above and only draw the required objects.
What can you say about the efficiency of world production and the division of the…
Chapter 18 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- What are the sources of Hong Kong's comparative advantage? Explain.arrow_forwardPart 4-Stretch Your Thinking- Read the 1978 Milton Friedman quote regarding the accusation that Japan was unfairly selling the US cheap steel then answer the questions. "Let us suppose, for a moment, that the Japanese flood us with steel. That will reduce employment in the American steel industry, no doubt. However, it will increase employment elsewhere in America. We will pay for that steel with dollars. What will the Japanese do with the dollars they get for the steel? They aren't going to burn them. They aren't going to tear them up. If they would, that would be best of all, because there's nothing we can produce more cheaply than green pieces of paper. And if they were willing to send us steel, and just take back green pieces of paper, I can't imagine a better deal!" 16. Identify who benefited and who was harmed by low cost foreign imports from Japan. 17. What did the Japanese most likely do with the money that was used to buy their steel? 18. What likely happened to the US capital…arrow_forward23. What happens to the relative price of a good as a result of trade if there is an increasing return to scale in the industry producing the good. Is it still converging to a price between domestic and foreign price of the good? Draw a graph to answer.arrow_forward
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