Principles of Macroeconomics, Loose-Leaf Version
8th Edition
ISBN: 9781337096881
Author: Mankiw, N. Gregory
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 5CQQ
To determine
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
Principles of Macroeconomics, Loose-Leaf Version
Knowledge Booster
Similar questions
- U.S. U.K Wheat 12 10 Cloth 8 6 The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour). i.The United States has an absolute advantage in the production of both goods. ii.The United Kingdom has a comparative advantage in the production of wheat. iii.The opportunity cost of cloth is lower in the United States. iv.The opportunity cost of cloth is lower in the United Kingdom. Which one of the following is true? a) only i, ii and iv are correct b) Only i, ii, and iii are correct c) Only i and ii are correct d) Only iii is correctarrow_forwardEngland and Scotland both produce scones and sweaters. Suppose that an English works can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a. Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b. If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c. If a Scottish worker could produce only 1 sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.arrow_forwardYou 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 subsidies to their export industries, and lower tariffs on their imports of our goods, we should retaliate with tariffs and import quotas on their goods to show them that we won't be played for fools!" If a foreign country subsidizes the production of a good exported to the United States, who bears the burden of their mistaken policy?arrow_forward
- Use the Graph below to answer the questions about International Trade: Price P1 P2 P3 A B D F с E D -Quantity a. At equilibrium, what area represents Consumer Surplus? Blank 1 and Blank 2. b. At equilibrium, what area represents Producer Surplus? Blank 3 and Blank 4. c. Which Price Level would make this country become an importer of this good? Blank 5 d. Which Price Level would make this country become an exporter of this good? Blank 6arrow_forwardAssume the United States is an importer of televisions and there are no trade restrictions. US 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 U.S. consumers and U.S. producers and how it affects total surplus in the United States.b. 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 U.S. welfare? Who might support the policy?d.…arrow_forwardAn automobile company has two factories, one in Vietnam and one in Australia, each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 200 engines or 150 transmissions per day. A. Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies. B. The Australian factory has an comparative advantage in the production of transmissions. C. The Vietnamese factory has an absolute advantage producing both engines and transmissions. D. The Vietnamese factory has a comparative advantage in the production of transmissions.arrow_forward
- Assume Australia is an importer of sofas and there are no trade restrictions. Australian consumers buy 1 000 000 sofas per year, of which 450 000 are produced domestically and 550 000 are imported.a Suppose that a technological advance among Swedish sofa manufacturers causes the world price of sofas to fall by $200. Draw a graph to show how this change affects the welfare of Australian consumers and Australian producers, and how it affects total surplus in Australia.b After the fall in price, Australian consumers buy 1 150 000 sofas, of which 300 000 are produced domestically and 850 000 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 $200 tariff on imported sofas, 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 Australian welfare? Who might support the policy?d Suppose that the fall in…arrow_forwardAssume Australia is an importer of sofas and there are no trade restrictions. Australian consumers buy 1 000 000 sofas per year, of which 450 000 are produced domestically and 550 000 are imported.a Suppose that a technological advance among Swedish sofa manufacturers causes the world price of sofas to fall by $200. Draw a graph to show how this change affects the welfare of Australian consumers and Australian producers, and how it affects total surplus in Australia.b After the fall in price, Australian consumers buy 1 150 000 sofas, of which 300 000 are produced domestically and 850 000 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 $200 tariff on imported sofas, 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 Australian welfare? Who might support the policy?d Suppose that the fall in…arrow_forwardWrite an essay related to this treatise:NAFTA (North American Free Trade Agreement): In the introduction, develop the origin of comparative advantage and its relationship with international trade, using the selected treaty as an example. In the development of the essay, present:to. A description of the treaty that includes:* the reasons for the creation of the selected treaty and the countries included in it.* the benefits and effects of export and import in the treaty.* What were the obstacles encountered in the development of the treaty.arrow_forward
- *** Which of the following statements about production and trade is FALSE? 1. If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that good. II. Rich countries will generally have the comparative advantage in the production of all goods. III. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in the production of that good. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. b C d Specialization and Trade Q4 Homework Answered *** I only. I and II only. I, II and III. Ill only. Answered-Incorrect 1 attempt left Specialization and Trade Q9 Homework Unanswered X Your answer Resubmitarrow_forwardDavid Ricardo, the British political economist, used the example of two commodities—wine and cloth—produced by England and Portugal to explain trade. The following table shows the number of labor hours it would take England and Portugal to produce one unit each of wine and cloth: (see table attatched) Portugal can produce both wine and cloth using fewer labor hours than England uses. A group of mercantilists (who believe that nations build their wealth by exporting more than they import) suggest that Portugal has nothing to gain from trading with England. Would you agree? Explain your answer.arrow_forwardPrice $11.00 $7.50 $6.00 $4.00 D 4 6 12 15 Quantity The graph above shows the demand and supply of wrenches for the country of Spain. 5. If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, Spain produces and imports wrenches. 6. If the world price is $4 per wrench, and the government of Spain imposes a tariff of $2, how much tariff revenue will the Spain's government collect?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education