Beef 30 22 18 12 0 Beef 14 11 8 3 0 United States Mexico Vegetables 0 8 12 21 24 Vegetables 0 1 4 11 20 4. Using the numbers from the tables above, suppose the United States settles on producing 18 tons of beef and 12 tons of vegetables before any kind of trade and specialization. Mexico settles on 8 tons of beef and 4 tons of vegetables before and kind of trade and specialization. However, after trade negotiations, the United States decides to only produce beef and Mexico decides to only produce vegetables, which means the United States will produce 30 tons of beef and Mexico will produce 20 tons of vegetables. What will the outputs available be after trade if the United States exports 10 of the 30 tons of beef to Mexico and Mexico exports 15 of the 20 tons of vegetables to the United States? Do both countries gain from specialization and trade?

Beef 30 22 18 12 0 Beef 14 11 8 3 0 United States Mexico Vegetables 0 8 12 21 24 Vegetables 0 1 4 11 20 4. Using the numbers from the tables above, suppose the United States settles on producing 18 tons of beef and 12 tons of vegetables before any kind of trade and specialization. Mexico settles on 8 tons of beef and 4 tons of vegetables before and kind of trade and specialization. However, after trade negotiations, the United States decides to only produce beef and Mexico decides to only produce vegetables, which means the United States will produce 30 tons of beef and Mexico will produce 20 tons of vegetables. What will the outputs available be after trade if the United States exports 10 of the 30 tons of beef to Mexico and Mexico exports 15 of the 20 tons of vegetables to the United States? Do both countries gain from specialization and trade?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 29P: France and Tunisia both have Mediterranean climates that are excellent for producing/harvesting...

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Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
How does comparative advantage lead to gains from trade?
France and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In France it takes two hours for each worker to harvest green beans and two hours to harvest a tomato. Tunisian workers need only one hour to harvest the tomatoes but four hours to harvest green beans. Assume there are only two workers, one in each country, and each works 40 hours a week. Draw a production possibilities frontier for each country. Hint: Remember the production possibility frontier is the maximum that all workers can produce at a unit of time which, in this problem, is a week. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. Identity which country has the comparative advantage. How much would France have to give up In terms of tomatoes to gain from trade? How much would it have to give up in terms of green beans?
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
Why do low-income countries like Brazil, Egypt, or Vietnam have lower environmental standards than high-income countries like the Germany, Japan, or the United States?
Are differences in geography behind the differences in absolute advantages?
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What factors does Paul Krugman identity that supported expanding international trade in the 1800s?