Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B. At the trade equilibrium, there is no trade between A and B. country A receives higher real wage in terms of G1. the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries. country B imports G2.

Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. In autarky, the relative price of G1 is 1/3 in country A, and 2/3 in country B. At the trade equilibrium, there is no trade between A and B. country A receives higher real wage in terms of G1. the world relative price of G1 can be any value from 1/3 to 2/3, depending on the relative size of the countries. country B imports G2.

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

16 Consider a Ricardian trade model where both countries have expenditure share q =0.2 on manufactures, Country 1 has Am =1 and As=4 and L= 100 while Country 2 has Am*=As*= 0.5 and L*= 200. With free trade, which of the following is true? a.The relative wage is w/w*=8 b. Country 2 produces 100 manufactures and exports 80 manufactures c.Country 1 produces 400 services and exports 80 services d.All of the other options
Consider a Ricardian framework with two countries, A and B, and two products, G1 and G2. The following table shows the marginal product of labour in G1 and G2 in both countries. G1 G2 Country A 3 7 Country B 7 5 Which one of the following independent scenarios is not possible at the trade equilibrium? A.Compared to autarky, country A workers receive the same real wage in G2. B.Relative price of G1 is 8/3. C.Compared to autarky, country B workers receive higher real wage in G1. D.Relative price of G1 is 5/7.
What would happen in Ricardian model and the Heckscher-Ohlin model, a) If one country tried to export more to the other country? b) If one country restricted the amount of imports from the other country? c) What does this imply for trade policy? Please answer correct explain plz asap plz Don't answer by pen paper plz
Assume we are in a Ricardian world, where there are 2 countries: Home and Foreign, 2 goods: x and y, and one factor of production: Labor(L). The labor unit requirements for production of each good and the aggregate labor supply in each country are given as follows: Home country: ax= 4, ay= 3, L= 2400 Foreign country: a*x= 10, a*y= 6, L= 3000 d) If there is no trade between Home and Foreign, what will the relative price of x in terms of y be in each country?
A4 In the Ricardian model, the opening of trade raises the real wage in terms of the imported good without reducing it in terms of the exported good, so workers should favor trade. But workers facing import competition usually oppose trade, so there is something wrong with the model
Consider the Ricardian model with two countries, Home and Foreign, and two goods, X and Y. If Foreign workers have a higher real wage than Home workers and Home country has a comparative advantage in good X, we can conclude that: (a) Foreign country has absolute disadvantage in good Y. (b) Home country has absolute disadvantage in good X. (c) Foreign country cannot benefit from trade with Home country. (d) If trade is allowed, in Foreign country, those labours that are employed in the production of good X will lose from trade whereas the ones employed in the production of good Y will gain from trade. Explain your answer clearly. Limit your explanation to 200 words.
NAFTA has benefited the Canadian, Mexican and U.S. economy, while also having some drawbacks. I believe NAFTA was initially established to increase international trade, lower barriers, and build the economies of those involved. It was ultimately successful in eliminating tariffs and reducing some trade barriers. While increasing trade between the involved countries, it also created jobs, increased foreign direct investment (FDI), and lowered prices for consumers. However, many are still opposed to NAFTA and argue that the cons outweigh the pros. While supporting many jobs, many industries were still negatively affected such as the manufacturing, automotive, textile, and computer industries. Mexico was also negatively affected because the U.S. allowed for government subsidized agricultural products within the country. As a result, many Mexican farmers could not compete with this which put them out of business. That is why NAFTA was eventually converted to the United States-Mexico-Canada…
Consider Alpha, a country that is open to trade in goods and services with the rest of the world, where prices are fixed and in which only the goods market exists. In Alpha, the Marshall-Lerner condition doesn't hold — more precisely, net exports depend positively on the realexchange rate. Initially, the country is in goods market equilibrium, and trade is balanced. Having discussed which of the following three Figures provides a correct representation of the initial equilibrium in Alpha, describe the effects of a real appreciation. In particular, discuss if and how the various curves represented in the graph you have chosen will be affected, and explain the effects of the appreciation of the exchange rate on the equilibrium values of income, consumption, investment and net exports.
c. Consider a Ricardian model with two countries, the US and Ecuador, producing two goods, bananas and machines. Suppose the unit-labor requirements are: aLBUS= 8, aLBE = 4, aLMUS = 2, aLME = 4. Let the US have 3200 workers and Ecuador have 400 workers. D. What would the pattern of trade be in free trade? Why? E. How much of each good would Ecuador produce in free trade if complete specialization occurred? F. Specify a plausible free trade terms of trade.
Answer the given question with a proper explanation and step-by-step solution. Suppose that εD = 0.70 and ε_D^F = 0.50 for a given country: Suppose that the foreign currency price of this country’s exports falls by 18% following a devaluation. What will happen to the quantity of exports?
3. What is a competitive devaluation, and why would a country do it?
in the ricardian model, a. differences in factors endowments give rise to trade b. countries can run trade deficits and surpluses c . there is only one industry in each country d. there is only one factor of production