the country which has comparative advantage and the country which gains from international trade.

Question

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Answer 1

Question

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

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Students have asked these similar questions

The diagram below shows supply and demand curves for the same good in two countries, A and B. Based on the prices and areas labeled there, Country B P Country A P P3 d P a P D D O The autarky price in Country A is P2. O Country B has a comparative advantage in this good. Moving from autarky to free trade makes suppliers in Country A worse off by the amount a+b. O Moving from autarky to free trade makes demanders in Country B better off by the amount c+d.

The figure shows the markets for shoes if there is no trade between the United States and Brazil. Which country has a comparative advantage in producing shoes? With international trade, explain which country would export shoes and how the price of shoes in the importing country and the quantity produced by the importing country would change. Explain which country gains from this trade.

Assume that Canada is an importer of televisions and that there are no trade restrictions. Canadian consumers buy 1.2 million televisions per year, of which 600,000 are produced domestically and 600,000 are imported. Suppose that a technological advance among Japanese television manufacturers causes the world price to fall $800 to $700. 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. Label the diagram carefully to show all the areas using letters of alphabets. (Do not shade the areas). After the fall in price, consumers buy 1.4 million televisions, of which 400,000 are produced domestically and 1 million are imported. Calculate the change (this will be only the area either gained or lost by consumers and producers) in consumer surplus, producer surplus and total surplus due to price reduction. Provide numerical answers by calculating the area of change in surplus due to fall in…

Answer 2

Question

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

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Answer 3

Question

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

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Answer 4

Question

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

Answer 6

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

Answer 7

Chapter 9, Problem 1SPPA

To determine

To find: the country which has comparative advantage and the country which gains from international trade.

Answer 8

Expert Solution & Answer

Explanation of Solution

The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.

Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.

The production of shoes by the U.S. producers has a high opportunity cost and Brazil has a lower opportunity cost. Hence, Brazil would gain from export and the U.S would have gained from import.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Trade:

Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.

Opportunity cost:

The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.

Answer 12

Ch. 9 - Prob. 1SPPA Ch. 9 - Prob. 2SPPA Ch. 9 - Prob. 3SPPA Ch. 9 - Prob. 4SPPA Ch. 9 - Prob. 5SPPA Ch. 9 - Prob. 6SPPA Ch. 9 - Prob. 7SPPA Ch. 9 - Prob. 8SPPA Ch. 9 - Prob. 9SPPA Ch. 9 - Prob. 10SPPA

the country which has comparative advantage and the country which gains from international trade.

To find: the country which has comparative advantage and the country which gains from international trade.

Explanation of Solution

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Chapter 9 Solutions