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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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…
Suppose the U.S. government increases trade barriers on Japanese cars coming into the United States.
a. What impact would this have on the American car market? What about the impact on American automotive workers? (Hint: think in terms of demand and supply analysis).
b. What impact would this have on the Japanese car market in the United States?
c. Who benefits and who loses from the higher trade barriers imposed on Japanese cars coming into the United States?
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Chapter 18 Solutions
Economics: Private and Public Choice (MindTap Course List)
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