Q#1 If Nation 1 and Nation 2 have same factor endowments and they use the same technology in the production of goods X and Y, Even then can have beneficial trade if the tastes in both nations are different.
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- Suppose there are two countries Japan and US and they produce two goods Computersand Cars. Japan has absolute advantage in both the goods? Can these two nations tradewith each other? Justify your answer with the help of a relevant theory of internationaltrade.Parts C and D please Assume that the world consists of two countries, the US and India. Technologies are as follows: Hours required for production textiles India: 8 Hours required for production textiles US: 6 Hours of production for airplane India: 24 Hours of production for airplane US: 8 India is endowed with 96 hours of L. Let textiles be the numeraire: Pt =1, so Pa=relative price of airplanes=$ price of airplanes.a. What is the range of possible values for the eqm (rel.) price of airplanes under free trade, FT?b. Suppose the FT price of airplanes is 2. What is the equation that describes the set of possible Cbundles forIndia under FT? Under autarky?c. Suppose that eqm C in India under FT is 8 tons of textiles and 2 airplanes. Check that this is possible under FTbut not possible under autarky using the equations from part b. Does India gain from trade? How do you know?d. The “L theory of value” as discussed by Karl Marx in Das Kapital says that goods have intrinsic value equal…how do I draw a comparisn between Mercantilism as an economic system with Adam Smith’s invisible hand principles as regards international trade?
- If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation. Output (Units) Nations Aluminum Oil Quirk 20 40 Turk 30 90 Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations? Multiple Choice 0.5 unit of oil for 1 unit of aluminum 0.5 unit of oil for 2 units of aluminum 1 unit of oil for 0.4 unit of aluminum 1 unit of oil for 4 units of aluminumSuppose there is a policy debate regarding Canada's imposing trade restrictions on imported semiconductors: The prime minister of Canada argues that Canada should threaten to impose a tariff on Chinese semiconductors in order to induce the Chinese to remove its tariff on Canadian cars. Which of the following justifications is the prime minister using to argue for the trade restriction on semiconductors? Unfair-competition argument Infant-industry argument Jobs argument National-security argument Using-protection-as-a-bargaining-chip argument'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.
- in the heckler-ohlin analysis, a country imports the good that uses intensively the countries relatively _____ factor of production, and a consequence of trade is that the income distribution in the country shifts away from the _____ factor a. scarce; abundant b. abundant; abundant c. abundant; scarce d. scarce; scarceConsider a world with two goods (steel and wine). There are two countries (Germany and France) which have identical technologies and preferences. Assume that the production of wine is relatively labor intensive, while the production of steel is relatively capital intensive. Also assume that after free trade in goods, Germany exports steel and France exports wine. (a) What can you say about the relative endowments of the two countries? (Explain which trade theorem you are using to answer this question). (b) Before opening to trade in goods, both economies allow capital mobility. i) In which direction is capital flowing (explain why)? ii) What will happen to the production of wine and steel in both countries? (hint: using an Edgeworth box might help); and iii) What will be the effect of capital mobility on factor prices in the two countries? (c) Instead, assume that there is labor mobility instead of capital mobility. i) In which direction will labor flow? ii) What will happen…List any three non-economic rationale of intervention of trade ? Which non-economic rationale will be more popular in a post COVID world ?List any three non-economic rationale of intervention of trade ? Which non-economic rationale will be more popular in a post COVID world ?
- According to economist Kenneth Arrow, interdependence among nations increases the value of scares resources and creates surplus. This surplus becomes available for redistribution among: O Only developed nations O Only developing nations O Only surplus creating nations O All developed and developing nationsTwo countries, Alpha and Beta consider the construction of a bridge across a river that separates them. The bridge would increase commerce and trade in both countries. If they both contribute to the building of this bridge, then each receive a profit of $32 million. However, if they both fail to contribute, they are each left with a profit of just $30 million. If one country contributes and the other one does not, then the country that does not contribute is a “free rider” and will receive a profit of $35 million. The contributing player spends a lot of money building the bridge and is left with a profit of only $28 million. 5.1. Fill out the payoff matrix (below) for the game by including all the elements (players, their strategies, and their payoffs). 5.2. Assume the players do not cooperate. Solve the game for the Nash equilibrium (find out the strategy played by each player in equilibrium). What is the payoff each gets…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…
