MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 9, Problem 11QE
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Identify the statement that is true or false.
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The parliament of Ghana is debating whether import substitution should take the form of quotas or tariffs. You are asked to brief them on the difference between the two. A representative from Ghana's National Labour Party is particularly worried about consumers? Which policy (tariffs or quotas) is better for consumers?
Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.
You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).
You are given a brief about Ghana highlighting the following points:
About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food.
The majority of Ghana's people live in rural areas and exist on a subsistence way of life.
Ghana has one of the highest rates of income inequality in the world.
Nearly half of the population is employed in agriculture.
After a meeting with Ghana’s president you learn that the government is also interested in repatriating migrants that went to European countries to study engineering a decade ago. Explain how this is likely to change Ghana’s comparative advantage
Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.
You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).
You are given a brief about Ghana highlighting the following points:
About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food.
The majority of Ghana's people live in rural areas and exist on a subsistence way of life.
Ghana has one of the highest rates of income inequality in the world.
Nearly half of the population is employed in agriculture.
Ghana imports and exports food from and to neighbouring Côte d'Ivoire. The latter nation is very similar to Ghana in most ways. Can you explain what may drive two very similar nations to trade?
Chapter 9 Solutions
MICROECONOMICS
Ch. 9.1 - Prob. 1QCh. 9.1 - Prob. 2QCh. 9.1 - Prob. 3QCh. 9.1 - Prob. 4QCh. 9.1 - Prob. 5QCh. 9.1 - Prob. 6QCh. 9.1 - Prob. 7QCh. 9.1 - Prob. 8QCh. 9.1 - Prob. 9QCh. 9.1 - Prob. 10Q
Ch. 9 - Prob. 1QECh. 9 - Prob. 2QECh. 9 - Prob. 3QECh. 9 - Prob. 4QECh. 9 - Prob. 5QECh. 9 - Prob. 6QECh. 9 - Prob. 7QECh. 9 - Prob. 8QECh. 9 - Prob. 9QECh. 9 - Prob. 10QECh. 9 - Prob. 11QECh. 9 - Prob. 12QECh. 9 - Prob. 13QECh. 9 - Prob. 14QECh. 9 - Prob. 15QECh. 9 - Prob. 16QECh. 9 - Prob. 17QECh. 9 - Prob. 18QECh. 9 - Prob. 19QECh. 9 - Prob. 1QAPCh. 9 - Prob. 2QAPCh. 9 - Prob. 3QAPCh. 9 - Prob. 4QAPCh. 9 - Prob. 5QAPCh. 9 - Prob. 1IPCh. 9 - Prob. 2IPCh. 9 - Prob. 3IPCh. 9 - Prob. 4IPCh. 9 - Prob. 5IP
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- Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy. You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialisation (ISI). You are given a brief about Ghana highlighting the following points: About half of Ghana’s population depends on agriculture, but Ghana still imports some of its food. The majority of Ghana's people live in rural areas and exist on a subsistence way of life. Ghana has one of the highest rates of income inequality in the world. Nearly half of the population is employed in agriculture. QUESTION B.2 Explain import substitution industrialisation and how it can affect Ghana. What role does learning by doing play and when does it make sense for the government to interfere?arrow_forwardAs a country develops economically, what changes usually take place in the goods it exports? Select your answer and explain WHY There is little change because comparative advantage does not change. Raw materials and agricultural products decline in importance, replaced by services and manufactured goods. Services and manufactured goods decline in importance, replaced by raw materials and agricultural products. Exports go from being diversified to being specialized in whatever the country finds its comparative advantage.arrow_forwardWe have export and import data of a country for the last two years. In addition, let's assume that we have the list of the most exported goods along with the countries that this country exports and imports to. How do we know if the trade pattern of this country is compatible with the comparative advantage theory? Also, what data do we need if we want to assess whether this country's trade pattern can be explained by the Hecksher-Ohlin theory?arrow_forward
- American firms outsource many jobs to other, lower cost countries. How can this outsourcing actually lead to increased employment here in the USA? How can there be any economic gains for a country from both importing and exporting the same good, like cars?arrow_forwardIn the past, comparative advantages have sometimes shifted from one nation to another. What factors do you think caused these shifts? Why? Was there anything a nation could have done to prevent an advantage from shifting to another nation?arrow_forwardThe United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?arrow_forward
- Shoes are labor-intensive and satellites are capital-intensive to produce. The United States has abundant capital. China has abundant labor. According to the Heckscher–Ohlin model, which good will China export? Which good will the United States export? In the United States, what will happen to the price of labor (the wage) and to the price of capital?arrow_forwardUsing the following data, decide which country has comparative advantage for which good: good x good y Country A 75 75 Country b 60 70arrow_forwardWhich of the following BEST describes comparative advantage? Country A can produce a product at a lower opportunity cost than Country B Country A can produce more of a product than Country B Country A has a currency worth more than the currency of country B Country A uses a smaller amount of a resource to produce than Country Barrow_forward
- Which of the following best represents the benefit of trade based on comparative advantage? Large countries will benefit, but small countries will be better off without trade. Countries with better technology cannot benefit by trading with countries that have less technology. Small countries will benefit at a cost to larger countries. Each country can buy a good at a cost that is less than what is would cost to produce the good in the home country.arrow_forwardWhat are the sources of Hong Kong's comparative advantage? Explain.arrow_forwardThere 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 right. 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 RS₁). 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…arrow_forward
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