Q24. Consider two identical, 2 good, 2-factor economies with IRS in both goods. Through trade, Hexports X and F exports Y.i. Describe and show the circumstances under which H can be worse off from trade relative toautarky..ii. Describe and show the circumstances under which F can be worse off from trade relative toautarky.iii. Are factor prices equal across the two countries in the above cases? Explain why or whynot?

Bescribe and show the circumstances under which H can be worse off from trade relativ arky.. escribe and show the circumstances under which F can be worse off from trade relat arky.. re factor prices equal across the two countries in the above cases? Explain why or w

Bescribe and show the circumstances under which H can be worse off from trade relativ arky.. escribe and show the circumstances under which F can be worse off from trade relat arky.. re factor prices equal across the two countries in the above cases? Explain why or w

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

We 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?
Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. Graph Foreign’s PPF. Construct the world relative supply curve of banana. What will happen if Pa/Pb < 4/5? Graph the relative demand curve along with the relative supply curve of banana. Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples What is the equilibrium relative price of banana?
In a world where the only goods are cell phones and cereal: Jennereelam can produce: 80m kilos of cereal, and 200k cell phones, while Jonathannadu can produce: 30m kilos of cereal, and 15k cell phones. Even though Jennereelam is a bigger economy and can produce more of each product than Jonathannadu, this guy named Ricardo insists that they will both benefit if they trade. What is Ricardo's argument called, and why does he make the claim?
3. True or False? The gravity model states that trade between two countries will increase if the size of either country’s economy increases and the distance between the two countries is bigger. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Q3. Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good Y, autos) and is considering forming a free trade agreement with one of its trading partners. The future free trade agreement is opposed by labor unions in country A. Could you infer which type of country (namely, capital- or labor-abundant) country A and its trading partner are, respectively? What would happen to the two countries’ w/r ratios (the ratios of wage rate relative to capital rental rate) after the formation of the free trade agreement? Your answer:
Question 1 A. Explain the reason(s) why the equalization of relative factor prices is a result of trade. B. How can a country benefit economically from both importing and exporting the same product, such as automobiles, machinery? Just explain in short answer.
Consider the production productivity matrix of two goods from the US and India: United States of America India Labor force 200 800 Labor per unit corn 8 50 Labor per unit automobile 10 40 6. In India, how many units of corn is it willing to give-up to produce a unit of automobile? Group of answer choices 0.8 1.25 Both 0.8 and 1.25 Not enough data 7. The US, to achieve comparative advantage in producing a unit of corn, need to give-up how many unit(s) of automobile? Group of answer choices 0.8 1.25 Both 0.8 and 1.25 Not enough data
In che mid-1980s several of South Africa's maintrading partners imposed trade sanctions on SouthAfrica in an effort to bring an end to the then-prevailing policy of apartheid.South Africa mainly relied on the exports ofprimary commodities like gold, iron and other preciousmetals, while importing mainly capital goods.This almost instantly led to South Africa expe-riencing a shortage of capital goods, resulting insubdued economic growth. 31. In what did South Africa have a comparativeadvantage? 32.a.Draw a graph to illustrate production,consumption and trade in South Africabefore the imposition of trade sanctions.b.Was South Africa consuming inside, on oroutside its PPP? Explian your answer.c.Draw a graph to show the effects of tradesanctions on consumption and productionin South Africa.d. Did trade sanctrions change any opportunitycoSts in South Africa? If so, did theopportunity cost of everything increase?Did the opportunity cost of any itemsdecrease? Illustrate your answer…
Consider the standard trade model with two goods and two factors, labour and capital(d) Explain the difference between export-biased growth and import-biased growth,commenting on their economic impact. (e) Discuss two reasons why international trade has strong effects on the distribution ofincome.(f) Explain why economists often consider the effects of free trade on incomedistribution to be less important than the effects on overall welfare. Discuss anexample where the distributional effect has had more lasting importance.
9. Answer ALL parts of this question. Consider the standard trade model with two goods and two factors, labour and capital. (a) Suppose that a country experiences an increase in its labour force. Assume thatgood X is labour intensive and good Y is capital intensive. How would theproduction possibility frontier change as a result? Illustrate this with a simplediagram. (b) What does it mean for the “terms of trade” to improve and why might this matter interms of welfare? (c) Consider two countries: Home and Foreign. Each country produces two goods,cloth (C) and food (F). Assume Home is an exporter of cloth. Now suppose Homeimposes a 20 percent tariff on the value of food imports. What will be the effect ofthe food tariff on the relative price of cloth and terms of trade? Illustrate youranswer with a relevant diagram. You may assume that Home is large enough toaffect the world market.
With free trade, why is wage (income) gap between American skilled and unskilled workers widened? Which of the following is LEAST appropriate for an answer? A. Because American companies producing very expensive products need to hire more skilled workers while American companies producing inexpensive products do not at least hire more of unskilled workers or even reducing the employment of the existing unskilled workers. B. Because American people are willing to buy inexpensive products imported from other developed countries having comparative advantage in producing those inexpensive products rather than inexpensive ones manufactured in the USA. C. Because American companies producing very expensive products need to produce more and more by hiring more American skilled workers as demand for American expensive products from developing countries increases. D. Because free trade allows the USA to focus on specializing in producing very expensive products…
If two countries are very different in relative factor abundance, then empirical support for which of the following would be less likely? O the Factor Price Equalization Theorem the Law of One Price O the Gravity Theorem O the Heckscher-Ohlin Theorem O the Law of Demand