3 District 12 has 2 units of labor and District 8 has 1 unit of labor. The MPL of textilesin District 12 is 5 and in District 8 is 8 units of textiles per unit of labor. The correspondingMPLs of coal are 3 and 6. Further, assume that in no trade equilibrium each districtconsumes 1/2 of its output of coal. 1. Calculate the opportunity cost of Coal in both districts.2. Draw export supply and import demand for Coal. Make sure to label the axes, mark allthe relevant numbers on the vertical and horizontal axes, clearly state which country isthe exporter and which is the importer.3. Real wage in each country can be expressed in terms of Coal or Textiles. What willhappen to real wage in District 8 in terms of Coal and Textiles when the two countriestrade with complete specialization?

Ricardo postulated about the types of goods and services that countries should produce, and he…

District 12 has 2 units of labor and District 8 has 1 unit of labor. The MPL of textiles in District 12 is 5 and in District 8 is 8 units of textiles per unit of labor. The corresponding MPLs of coal are 3 and 6. Further, assume that in no trade equilibrium each district consumes 1/2 of its output of coal.

District 12 has 2 units of labor and District 8 has 1 unit of labor. The MPL of textiles in District 12 is 5 and in District 8 is 8 units of textiles per unit of labor. The corresponding MPLs of coal are 3 and 6. Further, assume that in no trade equilibrium each district consumes 1/2 of its output of coal.

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

Suppose country A and B have a labour force of 1 and produce hops and barley using only labour. Country A's unit labour cost are 0.5 for hops and 0.5 for barley, country B's 0.2 for hops and 0.4 for barley. Suppose that both are needed to brew beer in equal quantitiy, so that both national and international demand has the property that equal amounts of barley and hops are demanded. How much more beer (as a percentage) will be brewed under international trade than in autarky? Please enter the percentage rounded to a whole number (up or down is both acceptable) without the percentage sign.
Refer to Table 1-1 Assume that Derryland and Whetonia each has 40 labor hours available and that there is no trade. Each country consumes what it produces. Assume now that, without trade, Derryland spent 28 hours producing cheese (they really like cheese there!) and the remaining 12 hours producing bread. Whetonia spent 20 hours producing cheese and 20 hours producing bread. (Whetonians prefer a higher bread to cheese ratio.) What is the total output of CHEESE produced by both countries combined?
International trade Consider an H-0 economy in which there are two countries (US and France), two goods (wine and cheese) and two factors(capital and labor). Q1: Suppose an increase in the labor force in the US causes cheese production to increase. Which factor is used intensivelyin wine production? Which H-O theorem is applied to get this answer? Explain.
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:
The gravity model of international trade predicts that the trade volume between any two countries increases 1. with the distance between the countries. 2. with the GDP of the countries.
how do I distinguish between the Marginal rate of substitution and the Marginal rate of transformation in international trade using equations and graphs to support my answer?
The logic of service outsourcing - The Ricardian model It is sometimes argued in editorials or TV commentaries that the modern wave of outsourcing, especially outsourcing of services to Pakistan, defies the logic of the Ricardian model. Let’s examine if this is actually the case. The following table presents information on labor productivity in computer component production and call center services in Canada and Pakistan. Assume that Canada has an absolute advantage in both. To complete the following table, choose the number of calls that would be most plausible and consistent with the reality of outsourcing services to Pakistan, and indicate the good in which each country has a comparative advantage. Production per Employee Production per Employee Computer Components Call Center Services Country (Units per hour) (Phone calls per hour) Comparative Advantage Canada 18 9 _____ (Call Center Services / Computer Components Production)…
Gains from trade Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Country Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) Bellissima 8 16 Felicidad 5 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Bellissima produces 8 million pairs of jeans and 48 million bushels of corn, and Felicidad produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each…
International trade Consider an H-0 economy in which there are two countries (US and France), two goods (wine and cheese) and two factors(capital and labor). Q1:Suppose a decrease in the price of cheese causes a decrease in the wage rate in the US economy. Which factor is used intensively in cheese production in France? Which HO theorem is used to get this answer? Explain.
Suppose a country which produces only agricultural goods and electronic goods. Both goods use capital and labour as production inputs, however, the agricultural goods are assumed to be more labour-intensive. On three separate graphs, draw the “original” production possibility boundary (electronic goods on the horizontal axis, agricultural goods on the vertical axis) and illustrate each of the following situations: a. the country observes large increases in immigration; b. there is a technological improvement in the production of military goods only;c. a neighbouring country threatens to invade and the country responds by devoting more resources to military goods.
Suppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows: Output in Thousands of Litres Milk Cranberry Juice Northland 6 Or 3 Sounthland 2 Or 1 a) Which country has the absolute advantage in producing milk? b) Which country has the absolute advantage in producing cranberry juice? c) Which country has the comparative advantage in producing milk? d) Which country has the comparative advantage in producing cranberry juice? e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?
pics is just for reference i need Q20 solution Question 20 Refer to Table 1-1 in Question 11 and your answers to questions 11-18. (Same scenario as Q 19) Assume that Derryland and Whetonia each has 40 labor hours available and that there is no trade. Each country consumes what it produces. Assume now that, without trade, Derryland spent 28 hours producing cheese and the remaining 12 hours producing bread. Whetonia spent 20 hours producing cheese and 20 hours producing bread. What is the total output of BREAD produced by both countries combined?