1. Trade can happen at pre trade prices. True/False. Explain your answer theoretically and graphically. Also split trade gain into specialization gain and exchange gain.
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- Assume that the global economy consists of only two countries called F and G. It is said that there are only two goods, X and Y, at the same time. Below are the different combinations the two countries can each produce. Assuming that the cost of production is constant, what is the pre-trade opportunity cost of X 1 unit in Y? 1. (1) Country F: X 10 units or Y 20 units. (2) Country G: X 10 units or Y 10 units. 2. (1) Country F: X 2 units or Y 4 units. (2) Country G: X 3 units or Y 6 units. 3. (1) Country F: X 20 units or Y 5 units. (2) Country G: X 18 units or Y 2 units. 4. Among the cases presented in (1)-(3) above, which case satisfies the following conditions? Choose all State F exports good Y and imports good X (In which situations country F will export good Y and import good X.) 5. Which of the cases presented in (1)-(3) above satisfies the following conditions? Choose all Situation where trade does not occur (In which situations no trade will take place.)Q) Which statement is true of natural resources in terms of global trade or a country’s economy? a. Steep declines in the price of oil had a negative impact on America’s oil producers. b. The past decade has witnessed the discovery of an abundance of natural resources. c. Petroleum is the only natural resource that affects international marketing. d. Vast differences in natural resources result in minor shifts of wealth among countries. Give me correct explaination and not copy paste anything from anywhere.How can a nation use opportunity cost to achieve trade benefits? Group of answer choices By producing a product where it has the lowest opportunity cost and trading for products where it doesn’t have comparative advantage By analyzing the opportunity costs of potential trading partners and then trading only with those who have the same opportunity cost for producing the same good By improving production so that it has the lowest opportunity cost in all products By producing a product where it has the highest opportunity cost and then trading for any product where it has the absolute advantage in production.
- Draw the production possibility curve for each country using the data provided in the table. b. Which country has an absolute advantage in what product? Which country has a comparative advantage in what product? Show your work! c. Without trade, what is the price of food in terms of computers for both countries? Showyour work! d. What is the range of prices (i.e., the CPC) at which trade can occur? Also, show (a) the possible CPC for each country and (b) the possible production and consumption possibility lines for both countries after trade. Show your work!'If a country has an absolute advantage in the production of all goods then it cannot gain from trade' Explain under what assumptions the statement is correct.Suppose eachworker in Home can produce 12wheat or 4TVs. Assume that Home has 10workers. Suppose each worker in Foreign can produce 8 wheator 2 TVs.Assume that Foreign has 20 workers.a.What is the no-trade relative price of TVs in Home and Foreign respectively?b.Which country has an absolute advantage in the production of wheat? Which country has a comparative advantage in the production of wheat?c.Use two graphs (one for Home and one for Foreign) to display production possibilities along with indifference curves and label no-trade equilibria and a trade equilibrium constructed by you. (Assume that positive quantities of both goods are consumed in both countries in all equilibria). Pick your own numbers for the relative price in the trade equilibrium and for quantities consumed in the trade and no-trade equilibria for both countries.d.What is the real wage in units of wheat in Home in the no-trade and inyour proposed trade equilibrium?e.Calculate the gains from trade for Home by…
- Why is a nation’s production possibility frontier the same as its consumption frontier in the absence of trade? How does the nation decide how much of each commodity to consume in the absence of trade?11. Which of the following statements is FALSE? a) This model shows only half of the benefits from trade because it ignores return trade. b) Producers in country 1 gain more than consumers in country 1 lose. c) Consumers in country 2 gain more than producers in country 2 lose. d) International trade causes a net increase in unemployment.On his first day in office, President Donald Trump took the United States out of the Trans Pacific Partnership (TPP), a proposed free trade deal with 11 other countries in the Asia-Pacific region, representing nearly 40% of global GDP. If the TPP had come into existence, the countries in the TPP would NOT be in violation of the most-favored nation (MFN) principle in the World Trade Organization (WTO) by giving each other preferential trade access. Why? A. There is an exception to MFN regarding the Generalized System of Preferences. Because Vietnam, a developing country, was one of the 12 members of the TPP, that exception applies to the whole partnership. B. Because the United States has the largest economy in the world, it gets to decide when MFN applies and when it doesn’t. C. There is an exception to MFN regarding regional trade agreements (RTA), and because all the proposed members inhabit the Asia-Pacific region, the TPP would have been an RTA, and therefore, members could give…
- Bill and Fred bake cakes and pies. Bill's opportunity cost of baking 1 pie is 3 cakes. Fred's opportunity cost of baking 1 pie is 5 cakes. Who should bake the pie? Group of answer choices Fred Bill A country should specialize in producing the goods for which it has the highest opportunity cost. Group of answer choices True False If a country has a comparative advantage in producing fish, then they must also have an absolute advantage in producing fish. Group of answer choices True FalseLeontief’s paradox is an example of testing a trade model using actual data observations. If Leontief had observed that the amount of labor needed per $1 million of U.S. exports was 392 person-years instead of 182, would he have reached the same conclusion? Explain.Illustrate comparative advantage and the potential gains from trade using production-possibilities frontiers.
