Question 3 Assume that there are two countries, Thailand and Vietnam, and two goods, rice and scooters. Unit labor requirements, aLi (for Thailand) and aLi* (for Vietnam) and the labor force, L (in Thailand) and L* (in Vietnam) are given below. (a) ( аLS = 1.00 aLR = 0.20 L = 200 aLS = 0.50 = aLR 0.05 L* = 100 Draw the production possibility frontiers (PPFs) for Thailand and the Vietnam, with scooters on the horizontal axis. Label your graphs carefully. (b) (v Assume that the post-trade relative price of scooters in terms of rice, PsW/PRW, equals 7.5. Set the price of rice equal to one (i.e., choose rice as the numeraire good). Furthermore, assume that each country wishes to consume 100 scooters. Indicate the amounts produced, consumed, exported, imported, and the value of exports and imports for Thailand and Vietnam. Enter your results in a table with columns for each country and rows for the required information. (c) ( ) Verify that trade in this example is feasible (one country's exports are another country's imports) and balanced (value of exports equals value of imports for each country). Question 2 Below are five examples of unit labor requirements for a foreign country (denoted with an asterisk) and a home country. There are two goods: good-1 and good-2. For each example, show which country has the comparative advantage in which good, and which country has the absolute advantage. (a) aL1=0.5 aL2 = 0.2 (b) aL1 = 0.5 aL2 = 0.2 аL1 = 0.2 aL1 = 0.25 (c) aL2 = 0.5 aL2 = 0.1 aL1 = 0.6 aL2 = 0.3 аLI = 0.1 (d) aL2 = 0.3 aL1 = 0.7 aL2 = 0.1 aLI = 0.7 (e) aL2 = 0.07 aL1 = 0.4 aL2 = 0.1 * aL1 = 0.004 aL2 = 0.002
Question 3 Assume that there are two countries, Thailand and Vietnam, and two goods, rice and scooters. Unit labor requirements, aLi (for Thailand) and aLi* (for Vietnam) and the labor force, L (in Thailand) and L* (in Vietnam) are given below. (a) ( аLS = 1.00 aLR = 0.20 L = 200 aLS = 0.50 = aLR 0.05 L* = 100 Draw the production possibility frontiers (PPFs) for Thailand and the Vietnam, with scooters on the horizontal axis. Label your graphs carefully. (b) (v Assume that the post-trade relative price of scooters in terms of rice, PsW/PRW, equals 7.5. Set the price of rice equal to one (i.e., choose rice as the numeraire good). Furthermore, assume that each country wishes to consume 100 scooters. Indicate the amounts produced, consumed, exported, imported, and the value of exports and imports for Thailand and Vietnam. Enter your results in a table with columns for each country and rows for the required information. (c) ( ) Verify that trade in this example is feasible (one country's exports are another country's imports) and balanced (value of exports equals value of imports for each country). Question 2 Below are five examples of unit labor requirements for a foreign country (denoted with an asterisk) and a home country. There are two goods: good-1 and good-2. For each example, show which country has the comparative advantage in which good, and which country has the absolute advantage. (a) aL1=0.5 aL2 = 0.2 (b) aL1 = 0.5 aL2 = 0.2 аL1 = 0.2 aL1 = 0.25 (c) aL2 = 0.5 aL2 = 0.1 aL1 = 0.6 aL2 = 0.3 аLI = 0.1 (d) aL2 = 0.3 aL1 = 0.7 aL2 = 0.1 aLI = 0.7 (e) aL2 = 0.07 aL1 = 0.4 aL2 = 0.1 * aL1 = 0.004 aL2 = 0.002
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
please help me with question 2 and 3
Transcribed Image Text:Question 3
Assume that there are two countries, Thailand and Vietnam, and two goods, rice and scooters.
Unit labor requirements, aLi (for Thailand) and aLi* (for Vietnam) and the labor force, L (in
Thailand) and L* (in Vietnam) are given below.
(a) (
аLS = 1.00
aLR = 0.20
L = 200
aLS = 0.50
=
aLR 0.05
L* = 100
Draw the production possibility frontiers (PPFs) for Thailand and the Vietnam,
with scooters on the horizontal axis. Label your graphs carefully.
(b) (v Assume that the post-trade relative price of scooters in terms of rice, PsW/PRW,
equals 7.5. Set the price of rice equal to one (i.e., choose rice as the numeraire good).
Furthermore, assume that each country wishes to consume 100 scooters. Indicate the amounts
produced, consumed, exported, imported, and the value of exports and imports for Thailand and
Vietnam. Enter your results in a table with columns for each country and rows for the required
information.
(c) ( ) Verify that trade in this example is feasible (one country's exports are another
country's imports) and balanced (value of exports equals value of imports for each country).
Transcribed Image Text:Question 2
Below are five examples of unit labor requirements for a foreign country (denoted with an
asterisk) and a home country. There are two goods: good-1 and good-2. For each example, show
which country has the comparative advantage in which good, and which country has the absolute
advantage.
(a)
aL1=0.5
aL2 = 0.2
(b)
aL1 = 0.5
aL2 = 0.2
аL1 = 0.2
aL1 = 0.25
(c)
aL2 = 0.5
aL2
= 0.1
aL1 = 0.6
aL2 = 0.3
аLI = 0.1
(d)
aL2 = 0.3
aL1 = 0.7
aL2 = 0.1
aLI = 0.7
(e)
aL2 = 0.07
aL1 = 0.4
aL2 = 0.1
*
aL1 = 0.004
aL2
= 0.002
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