Suppose in the absence of trade, there are 10 firms in the United States producing cars at an average cost of $20,000 and annual sales of one million cars and in Japan there are 12 firms producing cars at an average cost of $19,000 and annual sales of 1.8 million cars. Now, allow trade between the two countries. What will happen to the number of the firms in the new integrated car market? Will it be greater or less than the total combined numbers of firms (22) before trade? Why? b. What will happen to the average cost of cars in each country? Will it be greater or less than the average cost before trade? Why? c. What is the basis for trade? d. Are there any gains from trade?

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.

Suppose firms incur transportation costs to sell their product abroad. How do transportation costs affect the prices that firms charge abroad? Suppose the price offered at home and in the export market is identical, but there are transport costs to ship the good abroad. Does dumping occur?  How does an increase in the number of product varieties benefit an importing country?   Explain how increasing returns to scale in production can be a basis for trade.   Why is trade within a country greater than trade between countries?      Why would you expect sellers of branded goods with high upfront research and development costs to be more interested in free trade than producers who do not incur any fixed costs?    Focus attention on the Ricardian model, the Heckscher-Ohlin model, and the monopolistic competition model if trade. Consider the intra-industry trade index for each model. What value for the index does each models predict? Explain your answer.

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?

Suppose that a very high tariff was placed on steel imported into the United States. How would that affect employment in the U.S. auto industry? (Hint: Think about how higher steel prices will impact the cost of producing automobiles.) (P.S. Be thorough, please. Thank you.)

Hi could you explain why the total output of milk without specialization is 30?

10. We have focused on the case of trade involving only two countries. Suppose that thereare many countries capable of producing two goods, and that each country has onlyone factor of production, labor. What could we say about the pattern of productionand trade in this case? (Hint: Try constructing the world relative supply curve.)

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…

12. If Portugal has a total of 120 man-hours of resources available for production, while England has only 90, what are the relative price (opportunity cost) of cloth in Portugal, before trade begins?     a) 1/2 yard of cloth     b) 2 man-hours/bottle     c) 1/3 bottle of wine     d) 2 bottles of wine     e) 3 bottles of wine

Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. Free Trade Price: $70 30 Units of Good Y are traded under free trade If a tariff of $15 is imposed by the home country on each unit of good Y imported, Foreign exporters receive a price of $60.  If a tariff of $15 is imposed by the home country on each unit of Good Y imported, Home consumers pay $75 If a tariff of $15 is imposed by the home country the number of goods traded is 20. a) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. b) Assume that instead of a specific tariff, an import quota will be used on good Y. What is the amount of the quota that will have identical effects (in terms of amount of good Y imports and the…