Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 3, Problem 5CQQ
To determine
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Suppose that in a day a worker in the United States can produce 10 bushels of corn or 2 shirts. In Russia a worker can produce 9 bushels of corn or 3 shirts in one day. Which of the following would benefit both the United States and Russia if trade occurred?
1 shirt for 6 bushels of corn
-----1 shirt for 4 bushels of corn
1 shirt for 1 bushel of corn
1 shirt for 2 bushels of corn
Im doing review for a class and I realize that 1 shirt and for bushels are the correct answer I am just confused on what formula would apply to figue this out
You are watching the nightly news. A political candidate being interviewed says, "I'm for
free trade, but it must be fair trade. If our foreign competitors will not raise their
environmental regulations, reduce subsidiaries to their export industries, and lower
tariffs on their imports of our goods, we should retaliate with tariffs and import quotas on
there goes to show them that we won't be played for fools!"
A) If a foreign country artificially lowers the cost of production for its producers with
lax environmental regulations and direct subsidiaries and then exports the
products to us, who gains and who loses in our country, producers or
consumers?
B) Continuing form part A above, does our country gain or lose? Why?
C) If a foreign country subsidizes the production of a good exported to the United
States, who bears the burden of their mistaken policy?
D) What happens to our overall economic well-being if we restrict trade with a
country that subsidizes its export industries?…
The world has two countries, A and Z, which each produce two products, gadgets and whizbangs. Without
world trade, the domestic price of gadgets in A is lower than the price of gadgets in Z. We can say that
Country Z has a comparative advantage in gadgets and should be exporting
them.
Country Z should specialize in producing gadgets.
Country A has a comparative advantage in gadgets and should be exporting them.
Country A has a comparative advantage in whizbangs and should be importing
them.
Chapter 3 Solutions
Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1 million televisions per year, of which 400 000 are produced domestically and 600 000 are imported. a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of Canadian consumers and Canadian producers and how it affects total surplus in Canada. a. After the fall in price, consumers buy 1.2 million televisions, of which 200 000 are produced domestically and 1 million are imported. Calculate the change in consumer surplus, producer surplus, and total surplus from the price reduction. c. If the government responded by putting a $100 tariff on imported televisions, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of Canadian welfare? Who might support…arrow_forwardSuppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat. a. If each state specialized in their respective comparative advantage: Iowa would produce million bushels of corn and million bushels of wheat. Nebraska would produce million bushels of wheat and million bushels of corn. Now assume Nebraska trades 120 million bushels of wheat for 120 million bushels of corn. With specialization and this trade, Nebraska will end up with million bushels of corn and million bushels of wheat, while Iowa will end up with million bushels of corn and million bushels of wheat. b.…arrow_forwardEconomists argue for free trade in import markets because importing goods decreases total surplus. no one is made worse off by importing goods. all consumers and producers benefit from importing goods. O the gains to the U.S. producers outweigh the losses to the U.S. consumers the gains to the U.S. consumers outweigh the losses to the U.S. producersarrow_forward
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